Comptroller’s Handbook Bankers’ Acceptances1
This booklet is designed to help examiners evaluate bankers’ acceptanceactivities. Some of the booklet’s topics are the acceptances’:• Purpose (what they finance).• Eligibility to be purchased by the Federal Reserve.• Accounting treatment.• Risks.A bankers’ acceptance is created when a time draft drawn on a bank, usually tofinance the shipment or temporary storage of goods, is stamped “accepted” bythe bank. By accepting the draft, the bank makes an unconditional promise topay the holder of the draft a stated amount at a specified date.Many commercial traders in the United States and abroad have foundacceptance financing a convenient and relatively inexpensive vehicle to financetrade. Although acceptances can be created in any currency, in practice mostacceptances are created in the major world currencies such as the U.S. dollar,the Japanese yen, the German mark, and the British pound.
Issuance of Bankers’ Acceptances
By far the largest proportion of bankers’ acceptances are created as a result ofinternational trade transactions. The diagram in the appendix provides apictorial summary of an acceptance-generating trade transaction. Following isan example of a bankers’ acceptance created by a trade transaction (thenumbers in parentheses refer to steps in the appendix’s diagram):NE Trading is interested in purchasing 20 personal computers from Tokyo Tech(1). Since the two companies have never done business with each other, TokyoTech will require that NE Trading obtain a letter of credit. The letter of creditplaces the bank in the intermediary role to facilitate the completion of thetransaction.