Which of the following is not a mechanism used to reduce payment and delivery risks in international trade?

The correct choice is that currency exchange is not a mechanism specifically designed to reduce payment and delivery risks in international trade. While currency exchange is essential for conducting transactions in different currencies, it primarily deals with the conversion of one currency to another and does not directly address the inherent risks associated with payment and delivery.

On the other hand, instruments like open accounts, letters of credit, and cash in advance serve specific functions to mitigate those risks. An open account allows the buyer to receive goods and pay for them later, typically posing more risk to the seller. A letter of credit acts as a guarantee from a bank that payment will be made, reducing the risk for the seller by assuring them that the bank will cover the payment if the buyer does not fulfill their obligation. Cash in advance minimizes risk for the seller by ensuring that payment is received before goods are shipped.

Thus, while currency exchange is a necessary part of international trade, it does not reduce payment and delivery risks directly, distinguishing it from the other options provided.