Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open.

What's a Letter of Credit? Are funds held in my bank for the amount in question?
In a domestic setting, Letters of Credit are often used to build public works needed to support a development.  So if you're bulldozing a few 3 story buildings to build a 50 story tower, the municipality will build appropriate water/sewer/gas/road infrastructure, and draw from the developer's letter of credit to fund it. The 'catch' to the developer is that these things usually aren't revokable -- once the city/town/etc starts work, the developer cannot cut-off the funding, even if the  project is cancelled. A letter of credit definitely isn't a consumer financing vehicle. The closest equivalent is a "line of credit" tied to an asset like a home.