FINANCING TRADE - GORDON PLATT EX-IM BANK FINALLY GIVING LITTLE GUY A FINANCING BREAK

FINANCING TRADE - GORDON PLATT EX-IM BANK FINALLY GIVING LITTLE GUY A FINANCING BREAK

Long known as a preserve of the Boeing Co., Westinghouse Electric Corp. and other mammoth exporters, the U.S. Export-Import Bank has been dramatically reformed under the leadership of Kenneth Brody.

Figures released last week for the latest fiscal year show that the total number of small business transactions now account for 78 percent of all Ex-Im Bank transactions (by number, but not by value, of course). The bank approved a record 1,910 transactions supporting small business in fiscal 1995, up from 1,182 in the previous year."I am heartened by these figures," said Maria Haley, Ex-Im Bank director. She said the bank has improved its small business programs "and launched an aggressive outreach to this important sector, and now we are seeing impressive results."

Small business financing totaled about 20 percent of all Ex-Im Bank financing in fiscal 1995. Working Capital Guarantees rose to $306 million from $180 million in fiscal 1994. More than 95 percent of this program goes to small business.

Ex-Im Bank's average small business transaction is $1.3 million, Ms. Haley said. "However, we often finance deals as little as $50,000, and up to $5 million," she said.

She said small businesses have benefited from Ex-Im Bank's commitment to environmentally beneficial exports. A working capital revolving line of credit guaranteed by Ex-Im Bank enabled a small California company, Flo Wind Corp., to sell $29 million of wind energy equipment and technology to India.

CURRENCY BOARDS CAN BUILD CREDIBILITY

To achieve a level of monetary credibility, developing countries with histories of inflation and devaluation need to adopt stronger institutional constraints on their ability to create inflation, according to researchers at the Federal Reserve Bank of Cleveland.

The devaluation of the Mexican peso, and developments in the emerging market economies in Eastern Europe, have kindled an interest in currency boards as a way of building monetary credibility. Owen F. Humpage, an economic adviser at the Cleveland Fed, and Jean M. McIntire, a senior research assistant, said in the bank's Economic Review that a currency board enhances a developing nation's monetary credibility by linking its money supply growth to that of a country with comparatively low inflation and a well-developed

financial sector.

A currency board exchanges domestic currency for foreign exchange at a fixed rate, on demand and under all circumstances. But currency boards also have drawbacks, the authors found. Critics point out that backing 100 percent of a nation's monetary base with foreign reserve assets is costly, since the currency board could invest in higher-yielding domestic assets. Moreover, the fixed exchange rate guaranteed by currency boards prevents exchange rate changes from helping an economy to adjust to economic shocks.

Another problem with currency boards is that they cannot serve as lenders of last resort and inject liquidity into a nation's banking system during a

financial crisis.

WESTERN UNION SPEEDS FUNDS COLLECTION

Western Union Financial Services International, Paramus, N.J., introduced commercial services that allow businesses to directly transfer money internationally.

International Quick Collect allows U.S. and Canadian companies to instantly collect funds from any individual or business abroad. The collected funds are presented in the form of a check in U.S. or Canadian dollars, guaranteed by Western Union, printed out at the user company's office minutes after payment is initiated by the sender.

Transfer amounts are limited to $3,000, but larger payments can be made using multiple transactions. A second service, International Quick Cash, allows U.S. and Canadian companies to send money to receivers in other countries using software installed in the sender's own offices.