The dollar originally acquired international currency status in the 1920’s, when the newly established Federal Reserve started buying and selling dollar acceptances, backstopping the market and enhancing its liquidity.

In particular, the US lacked a liquid market in trade acceptances, the instrument used to finance imports and exports.

One of the new central bank’s first actions was to encourage the development of a market in trade acceptances.

It did so by using repurchase agrements to buy for its own account the majority of trade acceptances issued in New York.

And, with their growing participation, the market in trade acceptances became more liquid.

Shadow banking can be conducted through trust loans (extended by trust companies), entrusted loans (company-to-company credits brokered by financial institutions), bank acceptances (company-issued drafts or bills that are endorsed by banks), and corporate bonds (debt securities issued by companies directly to investors).

Acceptances in sentence

Related words