Hi there,
So i was going through our industry and company course, and today I learnt that the US state can fine companies (as it did to commerzbank) for carrying out activities, deals and projects in sanctioned countries? How can a state fine a companion from another country for its business dealings?
In: Economics
One of the biggest issues with any form of international trade is the lack of trust. The simplest issue will be around the delivery of goods and the delivery of payment. Very often sellers will not find it practical to conduct face to face transactions with the buyer for obvious reasons. This is resolved typically by using an intermediary. For physical goods, this can be in the form of trading companies, shipping companies, insurance firms etc. For financial goods, it almost always involves a bank and interbank transactions.
This is where all government have controls and regulations. If they can block the financial transaction, then trade is very difficult. For the US, this power is immense as virtually no bank can afford not to do business in USD and with other banks that have to operate in the US. Hence all banks would rather pay a fine than to be essentially cutoff from interbank transactions (ie essentially, they will not be able to do business)
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