A letter of credit is a promise to pay on your behalf. In olden times when you travelled to another city or country for an extended time, you’d ask for a letter of credit from your home bank. When you went to a new bank to set up an account, you’d present the letter of credit along with your passport to get a local balance. The letter of credit would eventually make it back to your home bank and attributed to your account where the amount would be debited from your account and credited to the agent working on the other bank’s behalf. This is how international banking began, long before nation state currency.