The reason why bills can replace cash as the main settlement tool in international trade is that bills have the following characteristics, and it is precisely because of these characteristics that they can play a role in international settlement.
Right-setting nature
Right-setting nature means that the holder of a bill can prove his bill rights by relying on the rights recorded on the bill. The purpose of bill issuance is not to prove existing rights, but to establish new rights, that is, the holder can demand payment of a certain amount of money by virtue of the bill. The rights on the bill do not exist before the bill is generated, but will be generated and established together with the bill at the same time as the bill is generated. The exercise of the rights on the bill is a necessary condition for the possession of the bill. If the bill is lost, the rights cannot be exercised.
Literal nature
Literal nature means that the rights and obligations of the parties to the bill are entirely determined by the legally binding textual meaning recorded on the bill, and have nothing to do with other matters not recorded on the bill. Anyone who signs on the bill is responsible for the textual meaning of the bill and bears the responsibility of paying it when it is due. The meaning of the text recorded on the bill, even if there are errors, cannot be changed or supplemented in any other way other than the bill. The purpose is to protect the rights of the holder in good faith and maintain the security of the transaction. However, if there are changes in the records other than the amount on the bill, they should be changed when it is opened, and signed or stamped when the change is made. Therefore, the buyer cannot refuse to pay the holder on the grounds that the amount of the bill is incorrect.
Formality
Formality means that the bill behavior must comply with the statutory form of the Bills of Exchange Law, that is, the absolutely necessary items recorded on the bill must be complete and filled in strictly in accordance with the provisions of the Bills of Exchange Law, otherwise it will not have legal effect, and the bill behavior must be carried out in accordance with legal norms. Whether it is issuance, endorsement, presentation, transfer or pursuit of bills of exchange, etc., they must comply with the requirements of the Bills of Exchange Law, otherwise the bills and bill behaviors will be invalid. Matters not provided for in the Bills of Exchange Law may be agreed upon by the relevant parties or related persons.
Recourse
Recourse means that if the payee or acceptor of a bill refuses to accept or pay for a qualified bill, the legitimate holder has the right to sue and pursue all bill debtors through legal procedures to exercise the bill rights.
Reminder
Reminder means that when the holder of a bill exercises his right to request payment or right of recourse, he must present the bill to the bill debtor so that the bill debtor can fulfill his debt. Whether it is requesting acceptance or payment from the payee, or exercising the right of recourse against the predecessor, the bill must also be presented to him, otherwise the payee has the right to ignore it. If the bill creditor loses the bill, he can continue to exercise the bill rights after the court judgment.
Returnability
Returnability means that after receiving the bill amount, the bill creditor should return the bill to the payee so that the bill relationship is eliminated (such as the person who pays himself is the acceptor or payee) or the right of recourse is exercised against the predecessor (such as the payee is the predecessor of the right holder). If the bill creditor does not return the securities, the debtor has the right to refuse to pay the bill amount. This is because although the payee can be exempted from debt by paying, if the bill is not taken back, the bill may be transferred again with malicious intent. Once the bill is paid, it cannot be circulated, which shows that its currency function has limitations.
Among the characteristics of bills, the most important are liquidity, causelessness and formality, among which liquidity is the most basic characteristic, and causelessness and formality are both dependent on liquidity or serve liquidity.