Final answer:
The international standard for interpreting letters of credit is known as the UCP 500, part of the Uniform Customs and Practice for Documentary Credits and maintained by the International Chamber of Commerce.
Step-by-step explanation:
The international standard by which letters of credit (L/Cs) are interpreted is known as the UCP 500. UCP stands for the Uniform Customs and Practice for Documentary Credits, which is a set of rules on the issuance and handling of letters of credit. It is maintained by the International Chamber of Commerce (ICC) and is used worldwide to facilitate trade and ensure that all parties involved in a letter of credit transaction are operating under a common set of guidelines.
Letters of credit are crucial financial instruments in international trade that help to mitigate the risk of non-payment by providing a guarantee from the buyer's bank to the seller. The UCP 500 was often superseded by the UCP 600, the current version of the rules, which came into effect on July 1, 2007. Although the UCP 500 is less commonly used now, it has played an important role in the standardization and security of international trade finance over the years.