Then, nation A create an Embassy in Nation B.
Any nation can accept the new Embassies requests (can be a MoFA work to do).
Embassies have a cost to be built (20 gold, etc).
Having an Embassy allow to your diplomatic department start INGAME commercial trades (you can not trade with a nation without an embassy), define your diplomatic level on that nation (Friendly, Angry, netural).
Embassies can have a maintenance cost (small ammount monthly?)
You can disable your embassy.
A nation can not declare war to a nation where the nation has an embassy (so you can disable the embassy if you are going to war, but you will pay for a new embassy if you are in peace again).
Its a way the nations can use their money, and will allow nations enter to a new diplomatic module giving the MoFA more things to do and making more richer the pollitics in the game.