According to new research from the World Economic Forum, blockchain might be able to dramatically boost trade finance across the world – generating a whopping one trillion US dollars in international trade finance.

This research was carried out by the World Economic Forum in cooperation with Bain & Company, and it states that blockchain technology could soon prove a vital part in spurring trade and readily accessible financing for small- and medium-sized enterprises – so-called SMEs -especially in emerging markets.

Moreover, the research notes that calculations by the Asian Development Bank put the current global trade finance gap at a massive $1.5 trillion. In addition to this, this gap is also projected to increase in the coming years, growing to a staggering $2.4 trillion in 2025.

The report states that this issue mainly stems from the constrained access to financing options, such as loans and other lines of credit, that small- and medium-sized businesses face when they attempt to invest in order to subsequently grow their businesses.

Nevertheless, there seems to be a solution to this dire projection – at least according to the report by the World Economic Forum. In fact, it looks as if blockchain might be the savior for SMEs looking to finance.

The report states that through utilizing blockchain technology ”more broadly”, this funding gap can be reduced by a massive $1 trillion.

This is mainly due to how distributed networks can be extensively used in order to share transparent business records across a multitude of financial institutions all along a company’s supply chain, effectively giving further insight into a company’s financial credibility.

The report goes on to state that implementing blockchain is a measure that could be used in order to lower the credit risk for financiers, reduce the necessary fees, and effectively eliminate trade barriers.

In addition to this, the research notes that those who have the most to gain from it are the small- and medium-sized businesses that operate in environments which have constrained access to traditional credit, such as developing and emerging markets.

The research also specifically mentions the positive effect that widely implementing blockchain into trade would have in Asia. This is supposedly due to the fact that the Asian economies make up $105 billion of the trade finance gap – roughly 7% of it.

Moreover, the Asian economies also have approximately 75% of the global document-based transactions that occur across supply chains – in which blockchain technology could, therefore, improve transparent communication.

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