According to new (joint) research by the World Economic Forum (WEF) and Bain & Company, blockchain has an ability to fill in much of the $1.5 trillion dollar supply-demand gap in global trade finance only by easing financing for small and medium-sized enterprises (SMEs) in emerging markets.
In times when the global trade finance gap is at $1.5 trillion and is estimated to grow to $2.4 trillion by 2025, the research explains that the issue largely arises from limited access to credit and loans for SMEs that are looking to expand their businesses.
The researchers also argue that the missing funding can be reduced by $1 trillion if blockchain “is used more broadly” since the distributed networks are able to share business records across financial institutions and with that bring transparency to the credibility of businesses.
As the researchers wrote:
“They would help mitigate credit risk, lower fees and remove barriers to trade. If implemented, the main beneficiaries are set to be SMEs and emerging markets, which suffer most from a lack of access to credit and have ample room to grow trade. “
On top of this, the researchers added that a blockchain-based trade finance system would be beneficial to Asian economies as they account for 7% (or $105 billion) of the global trade finance gap.
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