It has long been anecdotally known that trade finance is a low risk for lenders. That claim now has a wealth of data to back it up. Today the International Chamber of Commerce (ICC) released its 2014 Trade Register Report, providing overwhelming evidence that trade and export finance – in all its forms – is a low risk bank financing technique.
The report supports ICC’s and USCIB’s advocacy of trade finance as a strong contribution to economic recovery and growth. Its findings hold the potential to alter attitudes towards trade finance, and therefore contribute to the growth of both global trade and the global economy.
The Trade Register also highlights a concern about the effect overly-stringent money laundering regulations have on trade finance flows. Strict regulations have damaged access of some firms to trade and export finance services.
“The intention of the Register was to progress the understanding of trade finance, its importance to global trade and its highly-effective risk mitigation capabilities,” explained Kah Chye Tan, Chair of ICC Banking Commission. “The impact of the Register, however, is much greater. As the latest results show, the Register provides concrete fact-based evidence that trade finance is low risk which, if fully reflected in capital requirements, would help banks to give companies the financing support they need for their exports, and to contribute even further to the global economy as it recovers from the global financial crisis.”
The report’s findings may help policymakers understand the negative consequences such laws have on export finance, which is crucial for economic growth in the developing world.
First launched in 2009 by ICC’s Banking Commission, the report is widely recognized as one of the world’s leading analytical reports on global risks for the trade finance industry—identifying risks across a range of trade finance products and markets.
ICC Flags up Concerns Over Effect of Money-Laundering Laws (Financial Times)
Staff contact: Eva Hampl