Blockchain Could Boost Trade Finance by $1 Trillion, WEF Research Says13.09.2018

Blockchain can fill most of the supply and demand deficit, which is $ 1.5 trillion in global trade finance, by simplifying the financing of small and medium-sized enterprises in emerging markets.

The study, jointly conducted by the World Economic Forum (WEF) and Bain & Company, shows that with the help of a blockchain, global companies can generate an additional $ 1 trillion in trade finance.

According to calculations by Asian Development Bank, the global trade finance deficit is currently $ 1.5 trillion, and by 2025 it could grow to $ 2.4 trillion. The study explains that this issue is largely due to limited access to credit for small and medium-sized businesses that seek to expand their operations.

However, researchers argue that if the blockchain is "used more widely," the amount of missing funding can be reduced by $ 1 trillion, as the distributed registry technology will help spread business records between financial institutions through the supply chain and ensure transparency of operations to increase trust between companies.

"This will help mitigate credit risks, reduce duties and eliminate barriers to trade. If the blockchain is implemented, the main beneficiaries will be small and medium-sized businesses, as well as emerging markets that suffer most from lack of access to credit and have ample opportunities for trade growth", the study said.

The researchers also added that a blockchain-based financing system for trade will be especially useful for Asian countries, since they account for 7% ($ 105 billion) of global trade finance deficits and 75% of global transactions based on supply chain records.

Earlier it was reported that the authorities of China and Hong Kong had switched to the launch of blockchain-based financing systems for trade in order to expand access to funds for small and medium-sized businesses and to reduce the level of fraud.

According to a recent PwC poll, 84% of companies are experimenting with blockchain, and according to a Deloitte survey, 44% of US executives find the overblown blockchain technology.

Despite this, investments in blockchain projects are still at a high level. For example, the audit company KPMG believes that the US is experiencing a boom in investment in blockchain technology. At the same time, in early August, experts from Forrester Research said that 90% of American blockchain projects will not be realized.