Trade Finance Scorecard: Regulation and Market Feedback

Abstract

The need for robust regulation on international banking and financial flows is clear. Access to correspondent banking and trade financing is particularly important for developing markets that depend on trade to create economic value and to drive inclusion. Certain parts of the current regulation, and its interpretation and implementation, are reported to result in adverse unintended consequences on the financing of international trade. Some of these consequences negatively impact cross-border remittance flows, which are equally critical to developing markets. Some regulatory and perceived compliance requirements have contributed to “derisking” by banks. This term refers to the exit from markets, banking relationships and client relationships that, in the worst cases, have resulted in loss of access to products and services critical to economic activity, trade, development and inclusion.