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Data for today’s episode is provided by Mercator Advisory Group’s report – Financing Commercial Trade: The Search for Liquidity.
The “Big Question” for Blockchain in Trade Finance and Services:
- Blockchain promises to eliminate paper-the nemesis of logistics experts-and enhance security and efficiency for trade finance and services.
- Trade services include document management, risk mitigation, and logistics support.
- Delivering increased safety and efficiency in trade services will improve liquidity in trade finance and expand trade capability.
- The “Big Question” is: Will blockchain trade services networks scale up?
- A number of blockchain-based trade consortia have developed over the past few years, moving beyond trials and into trade capabilities.
- A key challenge is that these networks are individual ecosystems-without standardization, it is unlikely these individual ecosystems will scale up.
- Mercator Advisory Group expects digital capabilities with blockchain to continue expanding, but there is not yet a blockchain revolution in trade finance.
Mercator Advisory Group’s latest research report, Financing Commercial Trade: The Search for Liquidity, provides a direct view into the latest trends in technology and tools in the trade finance space. Traditional trade finance remains a primary method for managing risk and creating liquidity, especially for international commercial merchandise exports and imports. There are now more methods than ever before to access liquidity and promote both domestic and international flows of goods and services.
“One of the interesting things we discovered during discussions with industry participants has been a marked uptick in the recognition of working capital management effectiveness, particularly as the coronavirus sledgehammer policies hit businesses,” commented Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service, author of the report, “so expectations for the adoption of these and other digital solutions have greatly increased.”