How are large sums of money transferred between nations?

Question

Say country A sends some billions of dollars to country B in aid or in exchange for some resource. How does the actual transfer take place? How does the wealth of country A decrease and the wealth of country B increase?

In: 472

Answer 1

Nations have state banks, such as the federal reserve in the United States. The transactions happen over a wire system, like fedwire or swift. In straightforward transaction like you are supposing, it’s just like any other international money transfer, only with larger amounts and between public banks controlled by the state.