A letter of credit is a document issued by a bank that guarantees payment to a seller of goods or services. An example of a letter of credit is as follows: "On behalf of ______________ (name of the bank), I am pleased to inform you that we have issued this letter of credit by your name and the amount of the same is $80,000. The letter of credit is issued after taking into consideration your request to the bank and on the word that you will make the payment in a timely manner"¹. Another example is when an exporter in an unstable economic climate requests a letter of credit from a bank to guarantee payment by a buyer².