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Bank Draft
Source: Encyclopedia of Banking & Finance (9h
Edition) by Charles J Woelfel
(We recommend this as work of authority and you can order
it here)
A
sight or demand draft, drawn by one bank as drawer upon another bank as
drawee. Such an instrument
is to be distinguished from a CASHIER’S CHECK. Bank
drafts purchasable at small fees by a bank’s customers provide a highly
acceptable instrument of DOMESTIC EXCHANGE. For example,
New York funds would be readily provided by the bank draft of an interior
bank, drawn on its New York City correspondent bank, purchased by the
interior bank’s customer faced with the necessity of payment in New York
City, as compared to a local check.
In
FOREIGN EXCHANGE, bankers’ sight or demand drafts, drawn on balances maintained
with foreign bank correspondents, provide a demand form of payment in
the foreign currency concerned which may be available at spot rates if
the distance involved permits quick airmail arrival of the instruments.
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