Export - Import Bank (Ex-Im Bank) - Explained
What is an Export - Import Bank?
Written by J. Mance Gordon
Updated at April 21st, 2024
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What is the Ex-Im Bank?
The Export-Import Bank of United States (Ex-Im Bank) is the official US bank specialized as an export credit agency (ECA). An ECA is an official entity established with the aim to financially assist companies in the USA that want to do business in emerging markets. Specifically, an ECA helps companies export to other countries by providing loans, guarantees, insurance, and other credit facilities.
What does the Export-Import Bank Do?
The Ex-Im Bank was established in 1934 by Congress. It is a public body operated under a congressional charter. Its performance is periodically reviewed by congress. Globally, there are around 96 Export Credit Agency (ECA) which promotes export of their home countries.
The main purpose behind establishing the Ex-Im Bank was to increase exports of US goods to other countries around the world and to support job creation through exports. Unlike other agencies, which operate at taxpayer cost, the Ex-Im Bank is a self-sustaining federal body. It follows comprehensive and prudent risk management practices.
The Ex-Im Bank accepts both commercial or political risk associated with business in other countries. It is willing to accept political (war, terrorism, riots and revolution etc.) and commercial risk associated with doing business in foreign country.
The Export-Import Bank (Ex-Im Bank) acts as an agent on behalf of American exporters. It provides a working capital, export assistance, and guarantees of letter of credit (LOC) issued by foreign buyers.