Summary of Trade finance is nearing a much-needed shakeup

Looking for the article?
We have the summary! Get the key insights in just 5 minutes.

Trade finance is nearing a much-needed shakeup summary
Start getting smarter:
or see our plans

Rating

7

Qualities

  • Applicable
  • Overview

Recommendation

Financing trade is as old as trade itself. But while globalization and supply chains have transformed world commerce, trade finance remains mired in the past. The low-profit, operationally inefficient system, built on trust and wed to outdated practices, is primed for renewal, but the US–China trade war could torpedo its reforms. This expert overview from The Economist, useful for trade specialists and financial professionals, identifies the challenges the sector faces in a time of technological change and rising geopolitical tensions. 

About the Author

The Economist is an independent weekly magazine covering business, foreign affairs, science and technology. 

 

Summary

An archaic system of trade credit still holds sway in today’s global commerce.

Throughout the centuries, exporters have wanted their money when they make a sale, while importers have wanted to pay only after taking delivery of the goods. As a result, financial institutions have easily slipped into the role of intermediaries by providing trade finance. An importer’s bank receives a bill from the exporter and issues a letter of credit to guarantee funds. Using this instrument, the exporter may borrow from its bank with a promise to repay the amount once the importing firm pays its bill. Letters of credit are short-duration loans of four months...


More on this topic

Customers who read this summary also read

Investment Banking Explained
7
The Spider Network
8
Between Debt and the Devil
9
Dance of the Trillions
8
Darkness by Design
8
DeFi: The Hot New Crypto Trend Of 2020
8

Related Channels

Comment on this summary