Banking News

Wide Scale Trade Finance Digitisation a Step Closer – G7

(10 May 2021 – Global) Exporters and importers are being urged to prepare immediately for digital trade finance processes now or risk being left behind.

A new commitment made by Group of Seven (G7) digital and technology ministers to adopt electronic transferable records in international trade transactions has been welcomed as a ‘momentous step forward’ for long overdue trade digitisation.

The intergovernmental organisation consisting of the United Kingdom (UK), United States (US), Canada, France, Germany, Italy and Japan agreed upon a framework that will support the United Nations Commission on International Trade Law (UNCITRAL) and promote the adoption of its Model Law on Electronic Transferable Records (MLETR).

“Paper-based transactions, which still dominate international trade are a source of cost, delay, inefficiency, fraud, error and environmental impact. It is our shared view that by enabling businesses to use electronic transferable records we will generate efficiencies and economic savings. This will strengthen the resilience of our global economic system and play a crucial role in trade recovery across the G7” the ministers stated in a joint release.

“Global merchandise trade seems to be the one area of the economy immune to the rapid digitisation effected by the pandemic. Yet this is one type of immunity we cannot afford to be lasting, which is why we are so glad to see support at the ministerial level for the legal reforms necessary to enable trade digitisation at scale” commented International Chamber of Commerce (ICC) secretary general, John Denton.

“Industry now have 12 to 18 months to prepare, because once those legal barriers are removed, the market is going to move extremely quickly because as the business case sets out, the economic driver is enormous. The banks, insurers and others will likely move fast to capitalise on the efficiency gains and the technology providers who are already in the market will swoop in as well, so if companies are not prepared, they are going to get left behind, and those that have prepared are going to have a huge competitive advantage and be able to sweep away all the bureaucracy and costs that are dragging on everyone’s businesses” stated ICC UK Chapter Secretary General, Chris Southworth.