Treasury Today: Trade finance asset proposal could unlock extra liquidity for smaller businesses

When Tradeteq, the official technology partner of the global bank and investor-led Trade Finance Distribution initiative, published its recent whitepaper, ‘Trade Finance in 2020: Asset Distribution – A Macro-economic Necessity’, its aim was to explain how the greater distribution of trade finance assets to non-bank investors would help SMEs access funding, both during and after the COVID-19 pandemic.

Smaller businesses have been badly hit by the enforced shutdown of trade. As these businesses are less likely to receive letters of credit (LCs) from banks during this period, the need for other options must be considered, argues Tradeteq CEO, Christoph Gugelmann.
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His solution is to distribute trade finance assets to non-bank investors. He believes that doing so could unlock millions of dollars in liquidity, helping to plug the current US$1.5trn trade finance gap. Banks would also lower the risk on their balances, potentially creating new avenues for growth in the market.

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