Probably more foreign exchange is drawn in sterling - here and in other countries as well - than in the money of all other countries combined. This is due, however, to the fact that London is the financial center of the world, and exchange on that city is generally acceptable, if not preferred. For the same reason probably 90 per cent. of all letters of credit issued throughout the world are drawn in English money.

The term "rate of exchange"means the value or the price of the money of one country reckoned in the money of any other country, the value being a fixed rate of exchange, the price' a fluctuating rate of exchange.

The rate of exchange quoted between any two countries is for drafts, checks, or bills of exchange, and the price includes, besides the actual equivalent of the standard coin, some allowance for interest according to the tenor of the draft, and a premium which the seller demands for the economy and superior conveniences of his draft or check as compared with a remittance in currency or bullion. This premium, which represents the fluctuation, is more or less according to the amount of exchange in the market for sale and the demand for the same.