How foreign loans works? Do lessor country gives the cold cash to his lessee country? How about, if they have a different currencies?
In: Economics
there are no leases involved so the terms lessor and lessee doesn’t come into play. they are called lenders and borrowers or creditors and debtors.
usually the loans are made in a hard currency like the USD, Euro or yen. these currencies are globally acceptable and besides the borrowers usually want the loans to pay for imports and international trade is done in hard currencies mainly the US dollar so that’s what they are after.
These days, probably not cold hard cash, but an interbank wire transfer.
Loans like that are generally made in a reserve currency (dollars, euros, yen, etc.).
There’s a lot of different types of “foreign loans” out there, but that gets us off your questions.
Yes, they get sent money. Its very much like a regular loan in that regard, it gets deposited in your bank account.
In what currency? Thats written into the loan, it will say. Generally it will be in the currency of the person doing the loan, or in say a mutually agreed currency such as US Dollars or Euros.
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