Presently, international trade is plagued by a deep lack of trust. Reasons include terrorism, illegal migration, illicit trade of goods, outright fraud, failed delivery, money laundering, and, global restrictions brought about by Covid. These factors have contributed to tighter border controls and increased friction in terms of cross border transactions. Thus, there is a crucial need to embrace a technology that can underpin and improve processes and contribute to restoration of trust in international trade.
Blockchain Could Be the Answer
Until fairy recently, a global, interoperable, immutable and infinitely scalable technology for global trade simply did not exist. However, with the advent of blockchain, it now does. Powered by decentralized ledger technology (effectively a cloud-based ledger secured by modern cryptography), blockchain can work to ensure publicly available records that cannot be duplicated, manipulated or faked, all while increasing visibility in supply chains, end-to-end. Thus, blockchain has the ability to establish and maintain unprecedented levels of trust within the entire system of international trade.
Beyond Transactional
Blockchain is not limited to simple transactions but can also be relied upon to handle complex trade finance and international trade transactions. Smart contracts can be used to monitor and manage trade transactions from end-to-end and cryptocurrencies, such as Ripple, can be used to settle international trade transactions. For example, through our partnership with Ripple Net, we at Euro Exim Bank are able to provide instant, economical and highly accessible international trade settlement services to SMEs in emerging and frontier markets.
Every form of legal, financial and product-related information (including comprehensive details such as origin, source of raw materials etc…) can be made publicly available through blockchain, increasing transparency. Blockchain’s universally interoperable nature will make such a system of public records easily accessible and contributable to. This will create an environment that will make it easier for trade participants to look up each other, while also helping banks better manage risk. Such a system will also dramatically reduce the risk of trade finance fraud and money laundering as banks and other trade finance providers will be able to instantly access records and report any anomalies reducing costs, improving efficiency and re-building trust.
The Blockchain Revolution is Already Here
As early as 2016, one of the first blockchain based trade finance and settlement transaction was recorded by a major London bank for USD 100,000 worth of cheese and butter between Ireland and the Seychelles.
At Euro Exim Bank, we are dedicated to implementation of new technologies, having adopted blockchain since 2019 for international trade settlements via RippleNet. Blockchain also enables us to provide, where acceptable, any form of digital trade finance including letters of credit, bank guarantees, performance bonds, factoring and other supply chain finance arrangements. We are leveraging the power of blockchain every day and look forward to a freer and more open international trade arena, supported by this revolutionary technology.
