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Finance a la shmoop, what are bankers acceptance notes and cashier's checks ok

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so bankers acceptance note what is it well it's kind of a t-bill but with [Guy holding up the note]

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fewer calories that is a bank takes on the risk or promise of a future payment

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to be made to a creditor and it's you know backed by the bank and it's kind of [The bank and government building behind the note]

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backed by the federal government sorta sound weird well it is bankers

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acceptance notices are generally used in foreign trade where the two parties well

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just don't trust each other think about it like an escrow account when you buy a [People taking out a for sale sign]

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home the funds get released once it's confirmed that the home does not in fact [Bars covering a vault of money open]

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have nuclear waste under it the gal who says she's the owner of the home is in

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fact the owner and the forward costs of taxes have all been paid like it's a [Escrow account checklist]

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good sale the home's legally available to be sold in fact and after all the [Sold sticker is put on the sale sign]

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boxes have been checked well then the money releases from the bank to the

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seller and all's good while bankers acceptance notes work in [Money going to a person from the bank]

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the same fashion like the shipment of Chinese tow traps way more comfortable

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than the finger version was in fact found and picked up at the loading dock [Someone putting their finger into the trap]

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brought back to the factory and you know tested on chimps sorry Pete oh we're

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just keeping it real at that point the bank pays the foreign bank and while [Protesters]

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everyone's happy ish why pay the extra fees for a system to work this way like

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banks don't pay banks for free well because banks generally quote know each

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other unquote better than individuals know

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each other across foreign borders US banks trade with banks in whatever Stan [Money going across a map of the Earth]

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all the time even when US banks have no idea where whatever stand is or what it

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whatever stands for then you've got the kissing cousin of the bankers acceptance

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note the cashier's check well the cashier's check is guaranteed

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by the bank and drawn against the bank's own cash reserves that check is signed

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by a cashier as if the bank itself is buying whatever product is being paid

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for with a cashier's check the bank is the entity fully responsible for paying [Tow traps going to the bank]

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that amount and because of this quote extremely guaranteed safety unquote

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cashier's checks are common in complex or expensive transactions like buying a

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home or setting up an initial brokerage so that the odds of the monkey business

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happening when it comes time to collect the bananas are low and this is why [Monkeys running around with bananas]

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like bananas cashier's checks have appeal... [Guy holding a banana skin in one hand and a cashier's check in the other]

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