Import Fee Proceeds

Fees levied on importing members are used to reduce the Proxy Account debt of exporting networks. This ensures that exporting networks will see their Proxy Account deficit contract, even if their members can’t find adequate purchasing opportunities on counterparty networks.

The example below depicts a trade between network A and C (marked with red margins). This trade entailed an import fee of 5%, levied on importing member A. Since in this case network B carries the highest Proxy Account debt, the fee proceeds of this trade between A and C are rerouted to B in order to contract its internal debt position. Network B will continue to receive fee proceeds until the Proxy Account deficit of another network exceeds B’s Proxy Account deficit.

Note that the network receiving fee proceeds is selected according to its proximity to its individual export limit (more on how limits are set under “Import/Export Limits”). A network with an export limit of 100 and a Proxy Account deficit of -95 would be considered closer to its limit than a network with an export limit of 200 and a Proxy Account deficit of -185.

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