How does a bank transfer money internationally?

Question

What will be an ideal response?

Answer 1

A bank transfers money internationally by setting up a correspondent bank relationship with a foreign bank and depositing funds to its own account in that bank. When a customer goes to his or her own bank and asks to transfer money overseas, the bank accepts the customer's money at its domestic office, and then arranges for the correspondent bank to disburse funds in the foreign country to whomever the customer has designated. This may be done by instruction, in which case the domestic bank directs its correspondent to pay funds directly to a particular payee, or by the use of a bill of exchange that is drawn on the domestic bank's account at the foreign correspondent bank. In the latter case, the bill of exchange is given to the customer, who in turn sends it to the payee. The payee then cashes it at the correspondent bank. The actual physical delivery of currency internationally is seldom done. When required, it is arranged for by central banks and is commonly managed by the BIS.