A bank guarantee is a financial instrument which guarantees a specified sum of payment in the event of nonperformance by an exporter or by a foreign importer in the event of a payment default for goods purchased from a foreign supplier.

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A bank guarantee is a legal and binding agreement between a bank, the importer, and the exporter, which ensures that a payment will be made in the event of default by either party involved in the transaction. This financial instrument is often used in international trade to mitigate risk and secure payments.

A Bank Guarantee Is a Financial Instrument Which Guarantees a Specified