HashCash Redefines Global Trade Finance with HC TRADE built on Ethereum Blockchain
HashCash® today introduced HC Trade Finance, a blockchain technology product that brings a breakthrough for global banks and financial organizations in the business of financing corporate trade.
Traditionally, the business processes around financing a corporate trade activity is a paper intensive process. The risk of fraud is typically high for the financial organization underwriting it. Manual processing of documents also leads to reconciliation or book keeping inconsistencies and audit hassles. This soars up cost for the financial organization and creates barriers to supply chain financing for corporates.
All this in turn leads to inefficient working capital management and affects the overall economic output.
Deutsche Bank to beef up trade finance in emerging markets
Deutsche Bank plans to beef up its trade finance business in the developing world, creating new jobs and investing in technology, it said on Wednesday.
The focus is on Africa, Latin America, the Middle East, Asia, and central and eastern Europe, Germany’s largest bank said. It plans to hire between 20 and 30 people for those locations and will invest “a middle two digit million euro figure” in information technology over the next three years, it said.
Daniel Schmand, who heads the bank’s trade finance division, told journalists that he sees unmet demand for trade financing in particular for small and medium-sized companies.
Video: What to do and not to do in trade finance transactions
Bangladesh secures trade finance and infra packages
Development banks have extended infrastructure and trade finance packages to Bangladesh. The Asian Development Bank (ADB) approved a US$200mn loan package to improve the country’s urban infrastructure, while the International Finance Corporation (IFC) has signed a US$40mn working capital loan with Bank Asia, a local lender.
In the case of the ADB, the finance will fund 600km of road builds and improvements, 300km of drains and install 180km of pipes for water supply, with 60,000 metered household connections. It will fund priority infrastructure in the pourashava (municipalities) of Bangladesh, where populations are dense and facilities are generally basic and overstretched.
UN endorses ICC Uniform Rules for Forfaiting
In a historic moment, the ICC Uniform Rules for Forfaiting—ICC Publication no. 800 (“URF 800”)—were officially endorsed by the United Nations Commission on International Trade Law (UNCITRAL) in its 50th plenary session held in Vienna on 14 July 2017.
Forfaiting is a trade financing technique based on without recourse discounting of an instrument representing an exporter’s receivables payable at a future date, such instrument evidencing a payment claim or a debt obligation of an importer or a bank / financial institution pursuant to a letter of credit, standby letter of credit, guarantee, aval, bill of exchange or a promissory note created under an export transaction.
The URF 800 are the first ever global rules for forfaiting—the result of three-and-a-half years of joint effort by ICC and the International Trade and Forfaiting Association (ITFA)—developed after taking into account feedback from major trade finance banks, forfaiting companies and exporters. The aim of URF 800 is to create a standard set of rules that can be applied within the forfaiting markets worldwide.
HSBC and IBM develop cognitive trade finance tool
HSBC and IBM have developed a cognitive solution to automate and digitise trade finance documentation.
The solution, which is already in use in Hong Kong and the UAE, uses IBM robotics technology to analyse documents, digitising and extracting the relevant data before feeding it into HSBC’s transaction processing systems.
The aim is to remove the labour intensity from trade finance. HSBC’s global trade and receivables financing (GTRF) team processes more than US$500bn in documentary trade each year, meaning more than 100 million pages must be manually reviewed and processed.
A GAP IN GLOBAL TRADE FINANCE OF AROUND $1.6 TRILLION PER YEAR
Latest survey results and analyses by the Asian Development Bank (ADB) point to a gap in global trade finance of around US$1.6 trillion annually—much of it in developing markets, particularly in Asian developing countries. The concern is that, according to “2017 Rethinking Trade & Finance”, the latest report of the International Chamber of Commerce (ICC): “It is increasingly clear that banks will be unable to materially close this gap in Trade Financing, and that there is a misalignment in the availability of funds and liquidity”.
With worldwide trade developing at a fast speed, trade finance is the “oil in the engine” of international commerce and tool number one for treasury managers. The banking sector has recovered from the last financial crisis, and liquidity seems to no longer be an issue.
However, banking regulations have pushed banks to fund the needs of supposedly less risky multinationals and large corporates in developing countries. Risk-weighted asset regulation within Basel II, along with capital-adequacy ratio or solvency ratio requirements, have driven banks out of the micro, small and sometimes even medium-sized enterprise (MSME) segment. Banks are being challenged by capacity constraints, developed protectionist rhetoric coupled with trade-restrictive initiatives in key G20 economies, which are having a dampening effect on expectations of trade-driven growth and leading to a slowdown in import-based economic activity globally.
Maersk seeks role in trade finance as banks retreat
Maersk, the world’s biggest container shipper, is venturing into trade finance, as it seeks to fill a lending gap left by indebted banks pulling out of the crisis-hit shipping industry.
Moving into traditional bank territory and further down the shipping value chain, Maersk Line, part of A.P. Moller-Maersk , is offering to finance shipments and remove the paper trail from financing deals.
Maersk says it has no need to ask for collateral – one of the biggest headaches for banks and customers in trade finance deals – because it is carrying the goods on its vessels.
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