“The BIS report provides important insight
and analysis on the performance and impact of trade finance in recent years, in
turn helping business and policy communities to better understand the dynamics
that may affect the market's resilience,” said Kah Chye Tan, Chair of the ICC
As the world’s leading trade finance
industry representative, ICC provides independent, accurate and in-depth
analysis of trends in trade finance and began compiling data in response to a
call from the World Trade Organization to provide data for G20 leaders ahead of
their first economic Summit in 2008.
“ICC has recently made its trade finance
market intelligence and analytics available to the BIS. Data from the ICC Trade
Register and the ICC Global Surveys, is extensively used in the BIS report and
has provided evidence that trade finance is safe and worth promoting. ICC wants
to continue to be seen as the main broad industry vehicle for exploring drivers
and trends,” said Thierry Senechal, Senior Policy Manager of the ICC Banking
The new BIS report shows that historically,
the global trade finance market was considered liquid and well-functioning and
accordingly did not attract much attention from policymakers. As the global financial
crisis developed in 2008-09, however, the industry experienced a great deal of
turbulence, leading to structural adjustments and changes in the industry.
In November 2012 the BIS Committee on the
Global Financial System (CGFS) established a Study Group, chaired by John Clark
(Federal Reserve Bank of New York) which aims to improve central banks’
understanding of the structure and functioning of the trade finance markets and
explore how they can cooperate in better tracking trade finance developments to
improve financial stability.
In terms of financial stability risks, the
BIS report concludes that losses on trade finance portfolios historically have
been low. Moreover, given their short-term nature, banks have been able to
quickly reduce their exposures in times of stress though indicates that a
potential stability risk may take place when banks run down trade finance books
in response to funding and liquidity strains, thus allowing trade finance to
act as a conduit of stress from the financial system to the real economy.
The ICC Banking Commission has consistently
advocated a fair and rules-based multilateral trading system that would work to
the benefit of nations at all levels of development. As a result, policies that
would broadly address banking system capital and liquidity vulnerabilities, and
seek to avoid or contain disruptions to trade finance flows, are welcome.
Mr Senechal said: “ICC re-affirms its
intention to maintain a constructive dialogue with policymakers and regulators worldwide.
As a source of objective information on trade finance, the ICC Banking
Commission is well positioned to make a valuable contribution to discussions
concerning proposed regulatory changes for the industry.”
For more information on the ICC market
intelligence visit ICC
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