A multilateral netting system is beneficial in reducing the number of and the expense associated with inter-affiliate foreign exchange transactions.

Question

Quizplus · Accepted Answer

Multilateral netting allows subsidiaries of a parent company to net their foreign exchange payments and receipts with other subsidiaries. This reduces the number of cross-border transactions required, as well as the associated costs such as foreign exchange conversion fees and bank charges. Thus, a multilateral netting system can be beneficial in reducing expenses associated with inter-affiliate foreign exchange transactions.

A Multilateral Netting System Is Beneficial in Reducing the Number