It is no secret that countries that have achieved sustained high growth and major reductions in poverty in recent decades owe much of their success to international trade. But access to trade finance is highly uneven across countries and businesses, and getting more of it to those who need it will require three key changes.
GENEVA/WASHINGTON, DC – The world economy is losing steam. With forecasts for both output and trade well below the long-term average, reviving growth has become a top priority for policymakers everywhere. One underappreciated tool at their disposal is trade finance.
It is no secret that countries that have achieved sustained high growth and major reductions in poverty in recent decades owe much of their success to international trade. Less noticed is the fact that, without trade finance – working capital for exporters and importers that enables them to mitigate the payment risks inherent in international transactions – cross-border trade would be reduced to a trickle.
One reason why trade finance gets overlooked is that, in advanced economies, it is both available and affordable. But this is not the case for low-income countries, where foreign banks have limited appetite to operate in the best of times. Amid tightening regulatory requirements – relating to capital adequacy, money laundering, and sanctions enforcement – these markets’ appeal is diminished further.
GENEVA/WASHINGTON, DC – The world economy is losing steam. With forecasts for both output and trade well below the long-term average, reviving growth has become a top priority for policymakers everywhere. One underappreciated tool at their disposal is trade finance.
It is no secret that countries that have achieved sustained high growth and major reductions in poverty in recent decades owe much of their success to international trade. Less noticed is the fact that, without trade finance – working capital for exporters and importers that enables them to mitigate the payment risks inherent in international transactions – cross-border trade would be reduced to a trickle.
One reason why trade finance gets overlooked is that, in advanced economies, it is both available and affordable. But this is not the case for low-income countries, where foreign banks have limited appetite to operate in the best of times. Amid tightening regulatory requirements – relating to capital adequacy, money laundering, and sanctions enforcement – these markets’ appeal is diminished further.