Circular letter of credit

A circular letter of credit is like magic money that helps people who do business with other people far away.

Imagine you live in a village and there's another village far away where they make special fruits that you want to sell in your village. But you don't know anyone there and they don't know you, so how can you trust each other when you trade?

That's when a circular letter of credit comes in - it's a letter from a bank that tells the people in the far away village that if you order some of their fruits and pay for them, the bank will make sure the money gets to them safely.

It's like having a grown-up help you make a trade by saying "don't worry, I'll make sure everything is fair and no one gets cheated".

So you use the circular letter of credit to buy the fruits from the people far away, and they use it to know they can trust you to pay for what you ordered. And everyone is happy and makes money!