|ICC REPORT PROVES TRADE FINANCE IS LOW RISK, ASKS REGULATORS & G20 TO UNLOCK TRADE|
Oranjestad, November 16, 2011 - The rules set by bank regulators impose unwarranted capital requirements that choke trade and have adverse impacts on growth. A new report issued in October, 2011, by the International Chamber of Commerce (ICC) shows that trade finance is a relatively low-risk asset class that should not be feared by banks, nor overregulated by governments.
ICC also said it was pleased that the Basel Committee on Banking Supervision had announced measures that recognize trade finance as a low-risk activity for banks, and said that there is opportunity to further refine the rules to foster the development of trade and the support of SME clients.
The ICC report calls on standard setters and policy makers to make trade finance more accessible and affordable. Reliable and cost-effective finance and guarantees to companies looking to import or export commodities, consumer goods, and capital equipment are critical to keep trade flowing within and between counties. World trade is, in turn, key to global economic growth.
The outlook on the risks of defaults in trade and finance were revealed in the ICC report Global Risks – Trade and Finance. The report was based on analysis of the ICC Trade Finance Register, the most comprehensive dataset available on the market. It contains data from major international banks reflecting a minimum of 60-65% of traditional global trade finance activity, worth about USD2-2.5 trillion. Fewer than 3,000 defaults were observed in the full dataset of 11.4 million transactions.
The trade and finance experts at the ICC meeting also worked to frame business input to the G20 on stimulating jobs and growth, aimed at the G20 Summit in Cannes in November, 2011.
“Trade will play a key role in tackling the jobs crisis,” said Jean-Guy Carrier, ICC Secretary General. “Economic growth depends largely on the capacity of G20 governments to improve the conditions for international trade, including easing trade finance rules.”