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# Bills of Exchange

## Definition

Written orders from one merchant to another directing payment of a specified sum at a future date. These instruments facilitate trade by allowing merchants to conduct business without immediate payment in cash.

## Source Chapter

Book II, Chapter 2

## Context

Smith discusses bills of exchange as a key instrument of commercial credit, explaining how banks discount these bills to provide merchants with ready money. He analyses their role in the circulation of capital and trade.

## Economic Domain

Exchange

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