IDEAS home Printed from https://ideas.repec.org/a/ris/jofitr/1608.html
   My bibliography  Save this article

Can blockchain make trade finance more inclusive?

Author

Listed:

Abstract

There is little doubt that blockchain technology will change global trade. The question, however, is how it will impact some of the most intractable issues in trade finance. Last year, U.S.$15.5 trillion of merchandise exports were transported around the world. Up to 80% of global commerce requires trade finance to provide liquidity and risk mitigation. However, inefficiencies in trade finance today mean that many applications go unfunded. This U.S.$1.5 trillion trade finance gap is widest in emerging markets and for small- and medium-sized enterprises. Efforts to address these shortfalls have gained limited traction due to the decentralized nature of trade. In this paper, we review the design of enterprise blockchains to explore how changing the architecture of trade finance could impact the drivers of trade finance gaps. By grounding our analysis in the technical architecture of a live, enterprise blockchain platform, we aim to provide a tangible discussion around the technology. Applying blockchain technology to trade finance – regardless of the top of stack application – will directly impact the flow of information, compliance challenges, and profitability in ways that can contribute to a more inclusive trade finance structure.

Suggested Citation

  • Jessel, Benjamin & DiCaprio, Alisa, 2018. "Can blockchain make trade finance more inclusive?," Journal of Financial Transformation, Capco Institute, vol. 47, pages 35-50.
  • Handle: RePEc:ris:jofitr:1608
    as

    Download full text from publisher

    File URL: http://capco.com/-/media/CapcoMedia/Capco-Institute/Journal-47/CapcoJournal47JesselPrintv11.ashx
    File Function: Full text
    Download Restriction: no

    More about this item

    Keywords

    trade finance; finance; trade; blockchain; distributed ledger; distributed ledger technology; DLT; corda; R3; capco; gap; oracle; oracles; notary; notaries; credit; letter of credit; credit gap; bill of lading; digitization; cryptography; SME; demurage; innovation; hsbc; multi-sig; multisig; truth; truth layer; trust;

    JEL classification:

    • B27 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - International Trade and Finance
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F18 - International Economics - - Trade - - - Trade and Environment
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:jofitr:1608. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Prof. Shahin Shojai). General contact details of provider: http://www.capco.com/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.