What is a letter of credit?

An undertaking issued by a bank, on behalf of the buyer (importer), to the seller (exporter), to pay for goods and/or services, provided that the seller presents documents which comply fully with the terms and conditions of the letter of credit. It may also be called a documentary credit.

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What is the purpose of a letter of credit?

In what way might banks be involved in the carriage of goods by sea?