A joint report led by the World Economic Forum (WEF) details how the blockchain industry has the potential to add UDS 1 trillion in new trade to the global market.
Published Thursday, ‘Trade Tech – A New Age for Trade and Supply Chain Finance‘ comes as a collaborative effort from WEF, the supply chain and transport industries, and the System Initiative on Shaping the Future of International Trade and Investment.
The paper provides an overview of trade and supply chain finance, framing the discussion with the presumption that international trade and global value chains are ”critical” in discerning the wealth of nations and easing geopolitical tensions. It continues to highlight the importance of applying ”smart tools and technologies” in order to reduce obstacles preventing small and medium-sized businesses and emerging markets from conducting trade.
One of the solutions the paper provides is a blockchain one; the forward reads “Distributed ledger and other technological innovations promise groundbreaking advances in trade and supply chain finance by reducing costs and ease of use”.
Blockchain has already become a popular method for companies to track the movements of their products, with the decentralized technology being praised for its efficiency and immutable nature.
The report discusses the lengths to which distributed ledger technology (DLT) can help close the trade finance gap of USD 1.5 trillion by bringing in new trade, citing that USD 1.1 trillion of new trade can be established because of the barriers DLT can lift. Some USD 0.9 trillion in ”traditional” trade is expected to move to DLT and utilize the improved, cheaper services.
The paper also acts as a warning for governments not to fall behind on technological innovations, reading: “With some governments already starting to make these moves, the laggards will become increasingly disadvantaged.” It suggests that eventually utilizing DLT is unavoidable.
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