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1、ICC Trade Register 2024Global market dynamics and risk in Trade FinancePrinted in October 2024Copyright 2024International Chamber of CommerceICC Publication No.450/1081-13EISBN:978-92-842-0701-5All rights reserved.ICC holds all copyright and other intellectual property rights in this collective work

2、.No part of this work may be reproduced,copied,distributed,transmitted,translated or adapted in any form or by any means graphic,electronic or mechanical,and including without limitation,photocopying,scanning,recording,taping,or by use of computer,the internet,or information retrieval systems withou

3、t written permission of ICC through ICC Services,Publications Department.2023 ICC Trade Register Report1Table of Contents1 About the International Chamber of Commerce and its Partners 22 Foreword from the Chair of the ICC Trade Register Project 63 Executive Summary 74 Trade in 2023 85 Forecast for T

4、rade in 2024 and Beyond 136 What These Trends Mean for Trade and Supply Chain Finance 177 Credit Risk in Trade Finance 278 Access to Proprietary Trade Finance Risk Data 339 Future of the Trade Register 3410 Appendices 362024 ICC Trade Register Report2Chair,ICC Banking CommissionFlorian Witt,Division

5、al Head International and Corporate Banking,ODDO BHFChair,ICC Trade Register Project Krishnan Ramadurai,Chief Executive Officer,Global Credit DataProject Advisors,ICC Trade Register Project Avinash Lath,Senior Manager,Capital Management,Global Trade Solutions,HSBCChristian Hausherr,Head of Supply Ch

6、ain Finance(Europe),Deutsche Bank AGFaruq Muhammad,Global Head of Structured Export Finance,Standard Chartered BankJonathan Joseph-Horne,Managing Director&Co-General Manager,SMBC Bank International plcOrla Duffy,Head of Portfolio Management,Global Trade&Commodities Finance,SMBC Bank International pl

7、cProject Management,ICC Banking Commission Andrew Wilson,Global Policy Director,ICC Tomasch Kubiak,Policy Manager,ICCBoston Consulting Group Sukand Ramachandran,Managing Director and Senior PartnerMichael McAdoo,Partner and Director,Global Trade&InvestmentRavi Hanspal,Partner Aurelia Aslangul,Associ

8、ateEdward Capps,AssociateNikhil Dangayach,Senior Manager,BCG Trade ModelSimon Borgoltz,Senior Solution Analyst,BCG XGlobal Credit Data Michal Dhaenens,Head of IT,Data and DeliveryNina Brumma,Head of Analytics and ResearchVisit the ICC Banking Commission website:https:/iccwbo.org/publication/icc-trad

9、e-register-report/1.About the International Chamber of Commerce and its PartnersInternational Chamber of Commerce(ICC)is the institutional representative of more than 45 million companies in over 170 countries.ICCs core mission is to make business work for everyone,every day,everywhere.Through a uni

10、que mix of advocacy,solutions,and standard setting,ICC promotes international trade,responsible business conduct,and a global approach to regulation,in addition to providing market-leading dispute resolution services.ICC members include many of the worlds leading companies,SMEs,business associations

11、,and local chambers of commerceFor more information,please visit www.iccwbo.org2024 ICC Trade Register Report3This International Chamber of Commerce(ICC)Trade Register Report would not have been possible without the path-finding work done during the global financial crisis of 20072009 by the World T

12、rade Organization(WTO),the Asian Development Bank(ADB),the ICC Banking Commission,and various other partners and policymakers.We would like to acknowledge Steven Beck of the ADB and former WTO Director General Pascal Lamy for providing the initial impetus for this report,and the ADB for the all-impo

13、rtant seed funding to create a consolidated trade finance database hosted by ICC.The ICC Banking Commission is ICCs largest commission.It is the authoritative voice for the trade finance industry,setting the standards and benchmarks for industry practices.The Commission is delighted to continue work

14、ing with its two Trade Register Project partners:Boston Consulting Group(BCG)and Global Credit Data(GCD).As always,the ICC Banking Commission extends special thanks to our 22 member banks:This report was made possible by our member banks financial and resource contributions,and its findings are base

15、d on their underlying datasets.Members continued financial support,investment of time and resources,and uncommon focus on the bigger picture allow us to collect increasingly robust and meaningful data as we produce this report each year.The authors would also like to thank SWIFT for their contributi

16、on in providing“Trade Traffic”data to help validate product-and regional-level trends in global trade(governed by a SWIFT BI partnership framework).Data relating to SWIFT messaging flows are published with the permission of S.W.I.F.T.SC.SWIFT 2024.All rights reserved.Because financial institutions h

17、ave multiple means to exchange information about their financial transactions,SWIFT statistics on financial flows do not represent complete market or industry statistics.SWIFT disclaims all liability for any decisions based,in full or in part,on SWIFT statistics,and for their consequences.Finally,th

18、e ICC Banking Commission would like to thank all those who have been instrumental in the design and execution of the 2024 Trade Register report.Acknowledgements ANZ Bank of America Merrill Lynch Bank of China Barclays BMO Financial Group BNP Paribas Crdit Agricole CIB Deutsche Bank DZ Bank HSBC ING

19、Investec Bank ODDO BHF Rabobank Rand Merchant Bank Santander Socit Gnrale Standard Bank Standard Chartered Bank Sumitomo Mitsui Banking Corp UniCredit Wells FargoAs always,the ICC Banking Commission extends special thanks to our 22 member banks:2024 ICC Trade Register Report4Global Credit DataSince

20、2004,the Global Credit Data Consortium(GCD),owned by over 50 member banks,has collected,pooled,and distributed anonymised internal credit risk data from contributing banks loan books to support modelling of Probability of Default(PD),Loss Given Default(LGD),and Exposure at Default(EAD)in compliance

21、with prudential regulatory requirements.GCD also provides this credit data collection,analysis,and research to ICC members,contributing to a better data-driven understanding of credit risk in trade finance,supply chain,and export finance instruments,which allows ICC to focus on core strategic and ad

22、vocacy activities.Members include prominent banks from Europe,North America,South Africa,and Asia-Pacific.Membership grants exclusive access to the GCD databases to support banks IRB Advanced accreditation applications.The PD database covers 22 years of quarterly rating migration,default rates,and P

23、D calibrations.The LGD/EAD database now totals more than 300,000 CIB-defaulted bank loans from around the world and more than 155,000 borrowers covering 11 Basel asset classes.The robustness of GCDs data collection and quality infrastructure helps make GCDs databases the global standard for credit r

24、isk data pooling.Learn more at https:/globalcreditdata.org/interactive-dashboard/.GCD members are owners of the association and its data.They have a prominent role in steering the GCDs strategic direction to keep activities member-centric and drive the“By Banks For Banks”credo.Beyond the data itself

25、,members also have access to a vast network of highly experienced credit risk professionals in a variety of forums,workshops,webinars,surveys,and conferences,as well as exchanges in key strategic modelling areas including PD calibration,LGD modelling,stress testing,Comprehensive Capital Analysis and

26、 Review(CCAR),and International Financial Reporting Standards 9(IFRS9).Our Partners2024 ICC Trade Register Report5Boston Consulting GroupBoston Consulting Group(BCG)plays a central role in the Trade Register Report by supporting the day-to-day project and the development of the report,and by contrib

27、uting a strategic,value-focused perspective to its core topics.Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities.BCG was the pioneer in business strategy when it was founded in 1963.Today,we work c

28、losely with clients to embrace a transformational approach aimed at benefiting all stakeholdersempowering organizations to grow,build sustainable competitive advantage,and drive positive societal impact.Our diverse,global teams bring deep industry and functional expertise and a range of perspectives

29、 that question the status quo and spark change.BCG delivers solutions through leading-edge management consulting,technology and design,and corporate and digital ventures.We work in a uniquely collaborative model across the firm and throughout all levels of the client organization,fueled by the goal

30、of helping our clients thrive and enabling them to make the world a better place.BCGs expertise in the financial institutions sector spans all major topic areas to give global,regional,and local banks detailed insight,knowledge,and analysis across markets.Trade finance is an established and growing

31、topic area for BCGs wholesale and transaction banking practices.BCG has worked on more than 50 recent trade finance-related projects globally on industry questions and challenges such as market entry and growth,pricing,cost reduction,operations,and digital change and transformation.In addition,BCGs

32、Global Trade Model,which analyses and forecasts global trade flows and trade finance revenues including services trade as well as goods trade,is in its ninth year and leverages BCG analysis as well as data from third parties including UN Comtrade,IHS,WTO,Oxford Economics,FCI,BCR.Trade and trade fina

33、nce values throughout the report come from the BCG Global Trade Model unless otherwise stated.By partnering with the ICC Trade Register Project,BCG aims to bring readers additional strategic insight as well as commercial and technical industry perspectives.Beyond the ICC Trade Register,BCG continues

34、 to actively support the trade finance community with thought leadership.Recent and future publication topics include digital,regulation,geopolitics,and the increasingly importantly issue of sustainability in trade.BCG was founded in 1963.It is a private company with more than 100 offices in over 50

35、 countries.For more information,please visit .2024 ICC Trade Register Report6This years ICC Trade Register continues to drive the project forward,aiming to be not only the leading source of data and insights on the credit risk characteristics of trade finance products but also the foremost report on

36、 trade finance.Over the past year,the Trade Register has further expanded its dataset to deliver critical information to its stakeholders,including financial institutions,investors,regulators and all those interested in trade and trade finance.As I step down as Chair of the ICC Trade Register Projec

37、t to focus on my role as CEO at Global Credit Data(GCD),I look back with pride on the strong collaboration between ICC and GCD that has helped elevate the Trade Register into an indispensable resource for the trade finance community.This collaboration has strengthened the quality of the dataset and

38、refined methodologies,ensuring the highest standards in risk assessments.I look forward to continuing this partnership in my new capacity and helping the Trade Register expand the breadth and depth of its coverage.We have made several key enhancements to the Trade Register this year,improving both t

39、he quality and breadth of the data to better serve our members and the trade finance community.We have introduced a full data pack for our members to simplify the proposition and ensure a data-rich value-add for members.The ICC and BCG Trade Survey,with input from 200 practitioners from the Banking

40、Commission,has also provided fresh insights into trade finance,with plans to expand its scope in the future.As we continue to expand our dataset,our broader historical view allows us to offer more robust comparisons between products;for example,we have now built a long-term view of SCF that reinforc

41、es its low risk-profile.This year has been particularly exciting given the ICC and GCDs contribution to emerging regulation.The PRA acknowledged GCD and ICCs Performance Guarantees study as a key factor in shaping their near final rules on Basel III reforms,highlighting the value of high-quality,rep

42、resentative data in shaping trade finance regulations globally.The bigger message is that more banks need to join the Trade Register as more data will only reinforce the point that trade finance is a low default asset class.The 2024 Trade Register once again demonstrates that trade,supply chain and

43、export finance products continue to exhibit low-risk profiles.Despite the economic and geopolitical challenges faced in 2023,the data confirms that these products remain resilient,with low default rates and strong recovery potential across various regions and product types.This resilience reinforces

44、 the importance of trade finance in supporting global trade flows,especially during times of uncertainty.Looking ahead,the Trade Register remains committed to enhancing the project across several key areas.Expanding participation among member banks remains a top priority,alongside improving product

45、coverage and refining methodologies.The introduction of sustainability tagging and plans for SME transaction tagging will further enrich the dataset,providing a more holistic understanding of trade finance risk and improving access to capital where it is needed most.On behalf of ICC,I extend my sinc

46、ere thanks to our member banks and advisors for their continued contributions and collaboration.We look forward to working closely with our partners in the year ahead to continue driving value through the Trade Register and supporting the trade finance community.I would personally like to sign off b

47、y reminding all readers that we have promises to keep and miles to go before we sleep to paraphrase Robert Frosts poem Stopping by Woods on a Snowy Evening.2.Foreword from the Chair of the ICC Trade Register ProjectKrishnan Ramadurai,Chair of the ICC Trade Register Project2024 ICC Trade Register Rep

48、ort73.Executive Summary2023 was a challenging year for global trade,marked by ongoing geopolitical tensions,slower demand in key markets,and continued shifts in global trade patterns.Global goods trade fell by 4.8%in nominal terms(0.7%in real terms),primarily due to falling commodity prices and slow

49、ing demand in major economies.However,services trade showed resilience reporting 8%growth in nominal terms,fuelled by recovery in international travel and continued growth of digitally delivered services.As we move into 2024,early indicators point to a more positive outlook,with BCG forecasting a 4.

50、8%CAGR in nominal terms for global goods trade and 6.2%CAGR for services over the next decade(2023-2033).In parallel,trade and supply chain finance experienced more pronounced pressures in 2023 as corporates deleveraged amid high interest rates.Revenues saw a slight contraction,driven by tighter mar

51、gins and slower trade flows,although receivables finance continued to be the fastest-growing product,benefiting from demand for flexible working capital solutions and balance sheet de-recognition.While 2024 started slowly,growth is expected to return in the latter half of the year,with more positive

52、 growth forecast over the next decade.As the shift towards open account trade,accelerated digitisation,and the focus on sustainability and supply chain resilience continue to shape the sector,there are significant opportunities for growth in trade finance.Despite the tough environment,credit risk in

53、 trade finance continues to follow historical trends,with default rates remaining low across all major trade finance instruments.The data supports the longstanding conclusion that trade finance remains a low-risk asset class,even in regions where economic challenges were most pronounced.Data continu

54、es to play a critical role in shaping trade finance practices.Over the past year,ICC and GCD provided valuable insights to regulators and banks,notably contributing to both the EUs CRR3 outcomes and the PRAs preliminary guidance on Basel 3.1 capital treatment for the UK.As regulations evolve,data-dr

55、iven insights will remain essential in aligning policy with the realities of global trade finance.In conclusion,the low-risk profile of trade finance products remains a key strength.As trade continues to evolve,banks must harness data and innovation to seize new opportunities while maintaining robus

56、t risk management practices.2024 ICC Trade Register Report8A summary for global trade:a challenging year with a modest decrease in goods trade,largely buoyed by an increase in services tradeAfter sustained but slowing growth in recent years,2023 saw some headwinds in global trade alongside continued

57、 shifts in trading patterns and corridors.Global trade remained almost flat,with an overall decrease in goods trade and increase in services trade,pointing to the industrys resilience despite major economic shocks and concerns of de-globalisation.Global goods trade saw a year-on-year decrease in bot

58、h real terms(-0.7%)and nominal terms(-4.8%),which represents a slowdown from growth post-pandemic in 2021 and 2022 as well as a lower rate than forecasted in last years Trade Register.1 Although global nominal GDP growth also slowed in 2023,at 4.0%,it still remained ahead of goods trade.Trade was im

59、pacted more by decreasing prices than decreased volume,as evidenced by the sharper decrease in nominal terms.Despite a slight decline in trade volumes last year,throughout 2023 they remained well above pre-pandemic levels.In contrast,prices rose at a slower rate due to falling global inflation,a red

60、uction in global demand,and economic slowdowns in major economies:Global inflation fell from 8.0%in 2022 to 6.5%in 2023,heavily influenced by the recovery of energy and commodity prices from their peak in 2022;between the middle of 2022 and middle of 2023,global commodity prices fell nearly 40%.2 Gl

61、obal demand dampened,driven by central banks efforts to curb inflation by increasing interest rates;reduced government,business,and consumer spending;and uncertainty arising from ongoing geopolitical tensions across the globe.Major economies,particularly in rapidly developing regions with high debt

62、burdens,experienced economic slowdowns,which were exacerbated by the decline in global demand.Even as price increases have moderated,consumers continue to be impacted by expensive products and the knock-on effects of high energy prices,including the delayed appearance of high energy bills and increa

63、sed costs for energy-intensive products such as chemicals and other intermediate goods.Consumers in Europe are experiencing these costs most acutely due to the increased cost of energy following the sanctions on Russian gas resulting from war with Ukraine.2023s modest downturn in goods trade,however

64、,was mostly offset by an increase in services trade,which now makes up one-third of total global trade.3 The increase in services trade was driven primarily by the recovery of international travel post-pandemic and increasing demand for digitally delivered services(a subset of WTOs Mode 1,cross-bord

65、er supply).1 Trade and trade finance values throughout the report come from the BCG Trade Model unless otherwise stated.All data in real terms is benchmarked to the year 2010.2 Source:World Bank Commodity Markets Outlook-Press Release,April 2024 3 Including Modes 1,2 and 4 only,as defined by WTO.WTO

66、 breaks services trade down into 4 supply modes as follows:Mode 1(35%services trade)=cross-border supply including online,digitally delivered services,mode 2(8%services trade)=consumption abroad tourism,mode 3(56%services trade)=commercial presence income from foreign offices,branches,mode 4(1%servi

67、ces trade)=presence of natural persons expat on overseas projects for months;digitally delivered services defined as services provided and consumed through digital networks,including software,streaming and online financial services.4.Trade in 20232024 ICC Trade Register Report94 Source:Sector and pr

68、icing trend analysis references World Bank Commodity Market Outlook reports from April and October 2023BCGs 2024 Trade Survey in collaboration with ICC:This year,in parallel to the Trade Register effort,BCG collaborated with ICC to gain market insights into the state of trade and trade finance.Toget

69、her,BCG and ICC surveyed approximately 200 of the ICCs global banking commission members in global,regional,and local banks,as well as across multiple geographies.The survey covered topics including priorities and challenges for trade finance providers,as well as trends in key areas such as customer

70、 priorities,technological and digital investment,emerging regulations,and sustainability propositions.Key findings are included in this years Trade Register.For more information,please reach out to representatives from BCG or ICC.Trends in global goods trade saw significant variation by sectorAlthou

71、gh overall global goods trade saw a modest decrease in 2023,trends vary widely by sector.4 The energy sector saw the largest nominal decline(-19%),with prices normalising after their 2022 peak,which had been driven by pandemic-related disruptions and the military conflict in Ukraine.Despite this,dem

72、and remained relatively flat overall,as evidenced by a 1%increase in real terms.Natural gas prices saw the greatest decrease,with European prices plunging 80%from their peak in August 2022 due to a combination of mild weather,reduced reliance on Russian gas,and the transition to liquefied natural ga

73、s imports.Oil prices,however,increased from$72 per barrel to more than$90 by the third quarter of 2023,driven by OPEC+production cuts and geopolitical tensions in the Middle East.Both the metals and mining sectors experienced challenges in 2023,driven by declining demand from Chinas heavy industry a

74、nd housing sectors China consuming approximately 60%of total global metals supply,as well as reduced investment in construction projects due to high interest rates.As such,the metals sector saw a downturn in real and nominal terms(-5%,-7%),while the mining sector saw a slowdown in real terms and a d

75、ecrease in nominal terms(3%,-9%).Similarly,semi-finished intermediate goods including chemicals,textiles,automotive parts,electronics components,and machinery parts also saw an overall decrease in trade.This was driven in part by the chemicals trade,which declined in both real and nominal terms(-8%,

76、-10%),reflecting weaker global demand across industrial supply chains.Semiconductor trade followed a similar trend,coming down from its 2022 peak(-8%real terms,-10%nominal),though a strong rebound is forecast for 2024.Meanwhile,electrical machinery saw a 2%growth in volumes,though nominal values rem

77、ained flat.Agribusiness saw a modest decrease in both real(-2%)and nominal terms(-4%)as demand remained relatively stable despite a 1.5%increase in global wheat consumption.Even so,falling prices for grains and vegetable oilsdriven by improved supply conditions,favourable weather,and the Black Sea G

78、rain initiativeoffset the sectors overall growth.Consumer goods trade including non-essential goods such as consumer durables,consumer electronics,fashion and luxury also saw a decrease(-2%in real and-4%in nominal terms),driven by consumers cutting back on discretionary spending in response to eleva

79、ted prices.In contrast,both the automotive and aerospace sectors saw growth in 2023,reflecting rising demand for vehicles,particularly electric vehicles(EVs),and aircraft,as well as higher costs of raw materials and energy.Automotive trade increased 11%in real terms and 12%in nominal terms,supported

80、 by stronger growth in vehicles.Meanwhile,the aerospace sector saw a 15%increase in real terms and 16%in nominal terms,evidence of the recovery of travel post-pandemic.2024 ICC Trade Register Report10Trade corridors continued to shift by region as trade saw greater consolidation within trading blocs

81、 In 2023,global trade patterns were shaped by a combination of economic pressures,supply-demand shifts,and geopolitical factors.Trade frictions continued to play a significant role in reshaping trade corridors,as trade restrictions in 2023 were three times as high as in 2019.5 As a result,goods trad

82、e between the US and China fell by 5%between 2022 and 2023 in real terms,and trade between the EU and China decreased by 4%.China reoriented its trade towards fellow BRICS nations,including 55%growth in trade with Russia,16%with Brazil,and 9%with India.Although growth in Chinas bilateral flows showe

83、d signs of slowing,at a modest 2%in real terms,it remained a trade stronghold.Its cumulative growth over the last ten years remains significant,and its economy is on the whole resilient in terms of supply and demand,comprising approximately a third of global manufacturing value-add output and having

84、 seen a rebound in private consumption.6Meanwhile,the US increased trade with neighbouring countries.United States-Mexico-Canada(USMCA)trade increased by 2%in real terms,driven by the USMCA agreement,a rise in protectionism,and new domestic policies including the Inflation Reduction Act(IRA),Infrast

85、ructure Investment and Jobs Act(IIJA),and the CHIPS Act.In this changing environment,“connector”countries,like Mexico and Vietnam,have taken on a more prominent role,facilitating trade between politically distant blocs and capturing a larger share of both Chinese exports and US imports.7Russias trad

86、e with a number of its historic trading partners plummeted in 2023;trade between the EU and Russia fell by 58%,and Japan-Russia trade fell by 34%.Despite sanctions,however,Russias overall trade saw a 2%year-on-year increase in real terms,as Russia shifted its flows towards China,India,and other non-

87、Western markets,with real growth of 67%in the combined corridors of China and India.Europe,on the other hand,has diversified its energy supply away from Russian sources,turning to new partners for both energy imports and goods exports.Non-US dollar trade is on the rise,but the dollar is likely to re

88、main dominant in the near-to-medium termWhats happening?Non-US dollar(USD)trade saw slow but steady growth in 2023,driven primarily by the increased use of the Chinese yuan in trade involving China.This shift is also particularly prominent in the oil sector;historically tied to the“petrodollar,”arou

89、nd 20%of global oil trade is now settled in non-USD currencies.The USD still holds a commanding share of international payments(55%),well ahead of the euro(13%),Japanese yen(5%),British pound(5%),and Chinese yuan(3%).In the trade finance market,the USD also remains dominant(83%of all transactions),t

90、railed by the yuan(6%),the Euro(6%),and the Japanese yen(1%).8The yuans role,however,continues to expand.In Chinas cross-border payments,use of the yuan surpassed the USD in March 2023 and reached a record high of 53%in July 2023.9 Chinas push to internationalise the yuan is a key factor in its grow

91、ing popularity,as are initiatives like the Belt and Road Initiative(BRI),the issuance of dim sum bonds,and currency swap lines like the$7 billion agreement with Saudi Arabia.Russias shift away from the US and Europe following sanctions is another driver of the yuans growing popularity.By June 2024,t

92、he yuan represented 54%of trading on the Moscow Exchange,and the 5 Source:IMF,Speech:Geopolitics and its Impact on Global Trade and the Dollar(imf.org),May 2024.6 Source:IMF,World Economic Outlook Update,July 2024.7 Source:IMF,Speech:Geopolitics and its Impact on Global Trade and the Dollar(imf.org)

93、,May 2024.8 Source:SWIFT RMB Tracker,July 2024.n.b.RMB is the unit of the Chinese Yuan currency;share of international payments currencies excludes payments within Eurozone;SWIFT data accounts for payments settled on SWIFT platforms only,hence non-dollar currencies may be underreported.9 Source:Chin

94、as State Administration of Foreign Exchange2024 ICC Trade Register Report11currency has become a key component of Russias international reserves and trade strategy.The expansion of the BRICS bloc to ten members in 2023 has also contributed to the yuans popularity,as approximately one-fifth of loans

95、issued by the BRICS New Development Bank are now issued in yuan.Several other countries are also actively working to increase the use of local currencies in international trade.For example,Russia now requires energy exports to be paid in Rubles or other non-USD currencies.Similarly,the Reserve Bank

96、of India encourages exporters in the Persian Gulf to accept a minimum of 10%of oil payments in rupees,with the first rupee payment for crude oil made in December 2023.In the background,advances in cross-border payment technologies and alternatives to SWIFT may facilitate use of non-USD currencies,in

97、cluding Chinas Cross-Border Interbank Payment System(CIPS),Russias System for Transfer for Financial Messages(SPFS),as well as initiatives like BRICSpay and digital currencies.How significant could the shift away from USD be?Despite the recent increase in the use of non-USD currencies,there is consi

98、derable uncertainty about the extent of this shift.A major shift is unlikely in the near-to mid-term due to structural challenges like Chinas capital controls,concerns about the repatriation of funds,and the deeply entrenched role of the USD in the global financial system.Even so,due the emphasis on

99、 non-USD trade in fast growing trade corridors,such as China-ASEAN,non-dollar trade,driven by growth of the yuan,is likely to incrementally gain share from USD trade.What does this mean for Western banks with low non-dollar liquidity?Given that non-USD trade is concentrated primarily in BRICS corrid

100、ors,where Western banks typically have a more limited presence,there is little immediate risk of significant disruption owing to cannibalisation from de-dollarisation alone.Indeed,over 80%of respondents from banks in Western Europe believe that the increase in non-USD trade is unlikely to pose a sig

101、nificant threat to their trade and supply chain finance division.10Trade in services continued to growIn contrast to the dip in goods trade,services trade reached$7.9 trillion in nominal terms,up 8%from last year,as it continues to recover post-pandemic.11 By region,looking at the last five years,co

102、untries in the Middle East,including Kingdom of Saudi Arabia,United Arab Emirates and Qatar,as well as Ireland and India have seen the fastest growth,with CAGRs above 10%.In particular,the travel industry rebounded strongly as international travellers increased their spending on accommodation,food,e

103、ntertainment,and other services.After a pandemic slump,in 2023 the sector returned to its typical share of global services trade(approximately 25%).12 In tandem,international passenger transport increased,as global flights reached 94%of their pre-pandemic levels and airlines returned to profitabilit

104、y.13Even so,the transport sector as a whole,which closely mirrors goods trade due to shippings significant share,saw a decrease,driven primarily by a 40%drop in transport exports in China.Container overcapacity also contributed to this dip,reversing part of the growth observed in 2022,when shipping

105、was up 25%from the previous year.For all other sectors,2023 saw steady year-on-year growth.Financial services rebounded following a decrease in 2022,with the fastest growth coming from the EU.Construction services reported slower growth,still lagging 2019 levels despite an increase from 2022,driven

106、by delayed or cancelled projects resulting from labour shortages,the high cost of materials post-pandemic,and the increased cost of finance.Similarly,the information and communications technology(ICT)sector continued its growth trajectory.10 Source:ICC&BCG Trade Survey,August 2024.11 Services values

107、 include Modes 1,2 and 4 only.Mode 3 is excluded from the analysis due to lack of standardization in data reporting across economies.12 Source:Sector analysis references WTO Global Trade Outlook and Statistics,April 2024.13 Source:International Air Transport Association(IATA),2023.2024 ICC Trade Reg

108、ister Report12Digitally delivered services,which makes up approximately 20%of services trade,was the fastest growing delivery mode,with a 9%increase from 2022.14 Accelerated by pandemic-era mobility restrictions,a growing focus on operational efficiencies,and increased uptake of AI and generative AI

109、(GenAI),digitally delivered services continue to reshape the way services are traded across borders.2024 ICC Trade Register Report1214 Source:WTO estimate2024 ICC Trade Register Report13Notes:FX rates are floating.Sources:BCG Global Trade Model 2024,UN Comtrade,IHS,WTO,Oxford Economics,BCG analysisN

110、ominal goods and services trade($T)Real goods trade benchmarked to 2010 as the base year($T)FORECASTFORECAST182437681501020304020102015202020252030 4.0%5.9%4.8%6.2%20232901020304020102015202020252030 1.9%2.9%Exports of goods Exports of services5.Forecast for Trade in 2024 and Beyond2024 and beyond:e

111、arly signals of a return to growth in goods tradeAlready in 2024,global trade has begun to recover from last years challenges.Both goods trade and services trade saw a slight increase in the second quarter of 2024 relative to the second quarter of 2023.The modest recovery in trade has been supported

112、 by growth from large exporters including the Chinese Mainland,the US and India,with the most notable growth reported in Taiwan(China),Mexico and Vietnam.15 2024 is on track to be a year of normalisation relative to 2023.Central banks have begun to reduce interest rates in response to cooling inflat

113、ion in the US and Europe.As inflation cools,and low interest rates reduce borrowing costs,goods and services are likely to see increased demand and consumption.Continued recovery is therefore expected in the second half of 2024 and into 2025 before trade growth picks up again.As such,BCG forecasts t

114、hat global goods trade will grow at a 4.8%CAGR in nominal terms,and a 2.9%CAGR in real terms over the next 10 years(2023-2033),(see Figure 1).However,ongoing geopolitical conflict and a shifting policy environment shaped by recent and upcoming elections,with 2024 being an election year for more than

115、 half of the worlds population introduce significant uncertainty into global trade forecasts.Despite this,several key trends are expected to shape global trade patterns in the coming years.Figure 1BCG forecast of nominal and real trade growth,2010-2033 line chart15 Source:Data provided by IHS Markit

116、2024 ICC Trade Register Report14Continued shift toward supply chain de-risking and concentration into trade blocsIn response to ongoing trade frictions and geopolitical uncertainty(as well as reactive moves following lessons learned from the pandemic),supply chain de-risking has become a top priorit

117、y for corporates in 2023.As a result,trade is starting to concentrate within regional or geopolitically aligned blocs.Events such as the Ever-Givens obstruction of the Suez Canal in 2021 and the collapse of the Francis Scott Key Bridge in Baltimore,Maryland,in 2023 served as reminders of the ongoing

118、 sensitivity of global supply chains to physical disruptions.In late 2023,disruptions through the Suez Canal and Red Sea affected approximately 12%of global maritime trade,leading to significant delays and a surge in freight costs:prices increased between four-and six-fold by January 2024.The shippi

119、ng industry showed impressive resilience,with prices stabilising more rapidly than after pandemic-related disruptions.Yet the market remains tight,with high spot rates and congestion.These events,combined with rising trade frictions and protectionist policies,have contributed to an incremental shift

120、 in global trade dynamics.Trade between closer or geopolitically aligned regions was 12%higher than it was between more distant trading blocs in 2023,and foreign investment across blocs was 20%lower than investment within blocs.16 This trend towards consolidating trade into regional blocs is expecte

121、d to continue as corporates and governments seek to build greater resilience and security in supply chains.Reorientation of US-China tradeThe drop in trade between the US and China is expected to continue into 2024 and beyond,as both nations increasingly consolidate trade with new partners.With a-1%

122、CAGR in nominal terms(-3%CAGR in real terms)forecast for US-China trade over the next ten years,the US is likely to strengthen trade with closer partners,particularly with Canada and Mexico under the USMCA agreement.In nominal terms,Mexico and Canada are expected to increase trade with the US on com

123、parable levels(5%and 4%CAGR respectively).In real terms though,Mexico,in particular,is emerging as a key“winner,”with a 4%CAGR projected with the US over the next decade,compared to Canadas 2%CAGR,driven by reduced Canadian energy exports to the US.US-EU trade is also set to pick up thanks to increa

124、sed energy trade,at a 5%CAGR in nominal terms.Meanwhile,China continues to pivot away from the US and the EU,focusing instead on strengthening trade with Russia,the Association of Southeast Asian Nations(ASEAN),India,Africa,and the Southern Common Market(MERCOSUR).Chinese trade with Russia is projec

125、ted to grow at a robust 6%CAGR in real terms,and trade with the broader“Global South”,consisting of G77 countries excluding China,is expected to accelerate at a 6%CAGR in real terms as these regions continue to become more prominent in the global economy.Strongest growth to come from emerging econom

126、ies and the“Global South”Emerging economies are forecast to drive much of the growth in global trade over the next 16 Source:IMF,Speech:Geopolitics and its Impact on Global Trade and the Dollar(imf.org),May 2024.n.b.“geopolitically distant blocs”are determined by voting patterns at the UN.2024 ICC T

127、rade Register Report142024 ICC Trade Register Report15decade.The“Global South”is expected to see strong growth in both“South-South”and“South-North”trade.Both trade flows are expected to grow in real terms at a 4%CAGR,in contrast to 2%CAGR in“North-North”trade,highlighting the increasing trade intens

128、ity amongst emerging markets as their economies develop.Trade growth continues to be driven by commodities,yet as the“Global South”diversifies,other sectors are accelerating,including automotive,fashion and machinery.Out of the regions in the“Global South”,ASEAN and India continue to emerge as key e

129、ngines of growth,both recording high growth rates relative to their existing share of global trade(see Figure 2).Indeed,over the next decade,corridors touching ASEAN nations are set to account for approximately a fifth of global trade growth,while those involving India are set to account for a tenth

130、(both in nominal terms).ASEAN trade is expected to see a 5%CAGR,driven particularly by trade with China,where a 7%CAGR is forecast(both in Figure 2Key players in global goods trade,by region nominal and realnominal terms).Trade amongst ASEAN nations and other Asian economies is also expected to stre

131、ngthen,with growth in the region being driven by economies such as Vietnam,Indonesia,and Malaysia,and with further potential coming from the realignment of supply chains,enhanced trade connectivity,accelerated digital adoption,and low-cost labour structures.These factors make ASEAN an attractive mar

132、ket for foreign direct investment(FDI),which reached$226 billion in 2023or 6%of the regions GDP.Trade between ASEAN and the US is forecast to grow at a 6%CAGR in nominal terms,double the growth projected for its trade with the EU over the same period.India,meanwhile,is expected to experience even fa

133、ster trade growth in nominal terms,projected at a 9%CAGR over the next decade,in line with its GDP growth.As a rapidly emerging platform for both its domestic market and global exports,India is attracting increasing trade and investment.The countrys“Make in India”manufacturing goals,along with inten

134、sifying FDI-attraction programmes from several Indian states are set to fuel this expansion.These initiatives aim to boost domestic production while positioning India as a key export hub and China Plus One location.In parallel,Indias rising imports reflect the countrys need for energy and manufactur

135、ing components to support its expanding industrial base.India-China trade is forecast to continue its fast growth at an estimated 8%CAGR in nominal terms,despite growing manufacturing competition between the two,and Indias caution towards its growing trade deficit.As India diversifies its supply cha

136、ins and strengthens its global trade connectivity through initiatives such Notes:Only the 25 largest locations by 2023 exports,representing 65%of global 2023 exports,are shown.Intragroup trade is excluded for the EU27 and the GCC.Trade in services is excluded.FX rates are floating.Sources:BCG Global

137、 Trade Model 2024,UN Comtrade,IHS,WTO,Oxford Economics,BCG analysisAsia-Pacific excl.ASEANEuropeNorth&Central AmericaMiddle EastASEANCAGR(%),2023-2033CAGR(%),2023-2033Share of global trade(%),2023Share of global trade(%),2023RealNominal0%2%4%6%8%10%1%10%100%0%2%4%6%8%10%1%10%100%ChinaEU27USAJapanGCC

138、Rep.Of KoreaRussian FederationCanadaUnited KingdomMexicoSingaporeIndiaHong Kong(China)SwitzerlandVietnamChinaEU27USAGCCJapanRep.Of KoreaMexicoHong Kong(China)CanadaUnited KingdomSingaporeRussianFederationIndiaSwitzerlandVietnam2024 ICC Trade Register Report16Continued growth forecast for services tr

139、ade in 2024 and beyondGrowth in services trade is expected to outpace growth in goods trade,with a 6.2%CAGR forecast in nominal terms.17 As such,services trade is forecast to surpass$10 trillion by 2027,driven by rising digitalisation,AI adoption,and better global connectivity.Whilst large exporters

140、 continue to lead growth,Singapore,India,and the United Arab Emirates are likely to rise in rankings of global services exporters.Looking by sector,ICT and business services are forecast to drive growth in services delivered via cross-border supply(WTO Mode 1)and presence of natural persons(WTO Mode

141、 4),whilst travel and transport will drive growth in consumption abroad(WTO Mode 2).17 BCG forecast covers Modes 1,2&4,as defined by WTO,using available data under BOP6 system;notable currencies lack data(example:China,Canada,India,Switzerland).Source:WTO trade database.as the India-Middle East-Euro

142、pe Economic Corridor,and new trade agreements with Australia,UAE,and the EFTA nations of Europe,it is expected to solidify its role in global trade.EU diversification away from Russia and ChinaIn response to ongoing political geopolitical frictions,European corporations are continuing to diversify a

143、nd de-risk their supply chains,moving away from Russia and,increasingly,from China.As such,the EU is forecast to see a-15%CAGR in nominal trade with Russia as sanctions continue.Trade growth with China is also set to slow down as European businesses continue to de-risk.Instead,the EU is expected to

144、strengthen its trade relations with the US,India,Japan,Korea,and Africa,as it seeks to secure supply chains and build resilience.These combined trends are forecast to represent a notable shift in the global trading order by 2033,with the India and Vietnam becoming top ten global exporters,as Hong Ko

145、ng(China)and the United Kingdom drop down(see Figure 3).Looking at importers,India and Mexico are expected to jump up to the top five global importers,as GCC enters the top ten.Figure 3Change in top 10 global goods exporters and importers 2023 vs 2033Notes:Intragroup trade is excluded for the EU27 a

146、nd the GCC.Trade in services is excluded.FX rates are floating.Sources:BCG Global Trade Model 2024,UN Comtrade,IHS,WTO,Oxford Economics,BCG analysisTop ten importers(2023)Top ten importers(2033)CAGR 2023-33Trade flows,nominal$BnTop ten exporters(2023)Top ten exporters(2033)Trade flows,nominal$BnTrad

147、e flows,nominal$BnTrade flows,nominal$BnCAGR 2023-33KORJPNKORGCC 636 1,0976219805.6%6.3%CANCANCANCAN 567 8505488244.1%4.2%HKGMEXMEXGBR 575 9115558894.4%2.7%GCCGBRGCCIND 977 1,8496801,2816.6%8.6%CHNUSACHNUSA 3,380 5,4413,0484,4684.9%3.9%USACHNUSACHN 2,019 3,1012,0743,0484.4%3.9%EU27EU27EU27EU27 2,745

148、 4,2002,4873,6884.3%4.0%JPNHKGJPNMEX 718 1,3016331,0146.1%6.2%MEXINDINDJPN 593 1,0225628979.0%3.7%GBRKORVNMKOR 521 8248.2%3.5%7545342024 ICC Trade Register Report176.What These Trends Mean for Trade and Supply Chain FinanceOutlook on trade and supply chain finance:changes and challenges alongside ne

149、w opportunitiesFigure 4BCG Forecast of trade and supply chain finance revenues,2010-20332023 was a challenging year for trade and supply chain finance,as higher interest rates and slowing trade flows reduced trade finance volumes by 4.7%,with the most pronounced decline in documentary trade.18 As su

150、ch,following the slower growth in 2022 relative to previous years,BCG estimates that in 2023,revenues fell by 6.6%in nominal terms.As banks competed for volumes and to use their balance sheets operational capacities,margins became compressed,impacting banks overall profitability.This drop in revenue

151、s is less significant,however,than predicted in last years Trade Register(-7.4%),which points to the relative resilience of trade finance amidst a challenging trade environment.A mix of factors have contributed to this challenging year for trade and supply chain finance.According to BCG and ICCs Tra

152、de Survey,banks reported that the greatest threats to their businesses are disrupted trade flows due to ongoing geopolitical conflict,margin erosion,new regulation on capital treatment,and increased competition among banks,financial services providers,and fintech(see Figure 5).18 All trade finance v

153、alues are in nominal terms unless otherwise stated.CAGR,2023-33(%)5.4%4.7%3.7%5.0%Payables Finance2Receivables Finance1Documentary tradeTrade loan02550751002011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 20332010HISTORYFORECAST40495053514

154、3414550494558656162646771757882869094In 2023,higher interest rates and slowing trade flows have further reduced trade finance volumes,with the most pronounced decline in documentary tradeInternational trade finance revenues,global(nominal$B)3.8%In the longer term,the shift towards open account produ

155、cts is expected to continue at a steady rate,as geopolitical risks stabilize compared to past recent events34.5%54%42%41%39%38%39%43%44%44%44%45%46%45%46%46%47%47%47%47%48%48%48%48%55%56%57%54%49%47%48%47%46%43%44%44%42%42%42%41%41%41%40%40%40%39%40%48%49%4%4%4%5%6%7%7%7%7%7%7%7%7%7%7%7%7%7%7%7%7%8%

156、8%8%1%0%1%1%1%1%2%2%4%3%4%4%4%4%4%4%4%4%4%4%4%4%1%2%1.Receivable finance includes factoring and invoice discounting.2.Payable finance includes reverse factoring and dynamic discounting.3.Open account products include:receivables finance,payables finance and trade loansNote:FX rates are floating for

157、the entire period.Sources:BCG Global Trade Model 2024,UN Comtrade,IHS,WTO,Oxford Economics,FCI,BCR,SWIFT,BCG analysis2024 ICC Trade Register Report18Figure 5Key threats to Trade and Supply Chain Finance divisionsRevenues declined unevenly across regions,with Asia-Pacific experiencing the most notabl

158、e contraction,given its significant share of global trade finance revenues(just over a third).This decline was likely influenced by softer trade volumes reported by survey respondents and also reflected in the Trade Register dataset this year,potentially driven by a more challenging economic environ

159、ment in China.In contrast,the EU,which accounts for approximately a fifth of global trade finance revenues,saw a more modest reduction,helping to soften the overall impact.2024 started slowly,with trade and supply chain finance revenues reaching a trough in mid-2024,after which they began to increas

160、e.BCG forecasts that trade and supply chain finance revenues will grow at a 4.5%CAGR over the next decade,faster than the 3.8%CAGR of the last five years(2018-2023)(see Figure 4).Whilst a slower recovery is forecast for 2024 and into 2025,growth is expected to pick up by 2028.By product:continued sh

161、ift to open account,with light starting to shine on receivables financeLooking at variation across products,there is an ongoing shift towards open account as documentary trade products see below-average growth(nominal revenues forecast to grow at a 3.7%CAGR over next decade),driven by a slowdown in

162、letters of credit.Other traditional documentary trade products,however,like commodities and structured trade finance,continue to experience some growth.In open account,growth is increasingly driven by receivables finance,with nominal revenues forecast to grow at a 5.4%CAGR over the next decade,as pa

163、yables finance becomes marginally less attractive;payables are forecast to grow slightly above average at a 4.7%CAGR over the same period.In fact,there are already early signs that the disclosure rules and Basel III capital treatment regulation are driving reduced demand for payables finance.Instead

164、,demand is being channelled into corporate receivables finance,which continues to benefit from balance sheet de-recognition.Receivables finance is now the fastest growing trade finance product,successfully establishing itself as a comprehensive and flexible working capital solution.Customers have in

165、creasingly varied needs;instead of searching for a specific trade product,they now seek solutions that meet those unique needs,be it access to working capital,credit risk protection,or balance sheet de-recognition.For financial institutions,the ability to easily and flexibly provide customers with a

166、 range of products that meet their needs will be a key success factor.As a result,a common technological solution across trade and working capital will be a differentiator that enables seamless access.Although roughly 90%of banks are now investing in the modernisation of core platforms across produc

167、ts,many banks need to opt for fragmented solutions leveraging multiple vendors to serve all of their customers product needs.19Despite this fragmentation,the technology landscape is evolving rapidly,with emerging players bringing comprehensive solutions to this historically challenging space.Solutio

168、ns have yet to scale successfully,but the fact that nearly all banks 19 Source:ICC&BCG Trade Survey,August 2024.50%7%34%31%27%2%7%33%33%18%10%10%26%32%24%8%8%22%41%22%6%6%14%35%29%15%6%19%32%42%Increased conflict disrupting trade flowsHIGH THREATLOW THREATMargin erosionEmerging regulation on capital

169、 treatmentIncreased competition18%55%22%2%3%Increased fraud riskReducing share of doc tradeShifting trade corridorsIncreasing demand for non-dollar denominated trade20%45%22%8%5%Not a threatLow threatModerate threatHigh threatSevere threatSource:ICC&BCG Trade Survey,August 20242024 ICC Trade Registe

170、r Report19Figure 6Key customer sales and servicing prioritiesBanks are responding accordingly.As many as 90%are investing in digital customer experience initiatives and enhancing sales and servicing channels to meet rising client expectations.20At the same time,customers increasingly expect their ba

171、nks to be advisors and partners.They want support addressing variability in demand,access to consistent and reasonable finance,and assistance managing foreign exchange volatility.As a result,banks are offering tailored solutions that go beyond traditional financing,including advisory services on ris

172、k management,optimising working capital,and supporting clients efforts to build more resilient and sustainable supply chains.Impact of emerging regulation and capital treatment The regulatory landscape concerning trade and supply chain finance is undergoing significant change,with Basel III reforms

173、tightening capital requirements and introducing stricter risk assessments.These changes could increase costs for banks and borrowers alike.Additionally,the proposed revision of the EUs Late Payment Directive,which aims to reduce payment terms,could further challenge the profitability and long-term v

174、iability of supply chain finance programs.20 Source:ICC&BCG Trade Survey,August 2024.are investing in systems digitisation shows the importance of investing in these capabilities.Evolving customer expectationsPost-pandemic,customers have reshuffled their banking relationships.For the first time serv

175、icing quality is starting to be as important to customers as pricing.ICC and BCGs Trade Survey showed that less than half of respondents now rank fees and pricing as their top priority,with fast transaction turnaround times(accelerating speed to cash)and exceptional customer support emerging as crit

176、ical differentiators(see Figure 6).According to the survey,key servicing considerations include:Fast transaction turnaround times:Speed to cash and automation of paperwork and documentation Quality of customer support:Contact frequency,speed to resolution,and time to follow-up Speed and ease of acce

177、ss to financing:Speed of onboarding and financing decisions Front-line expertise:Advisory capability across trade and supply chain finance products,as well as structuring capability particularly in supply chain financeFees&pricingFast transaction turnaround timesQuality of customer supportSpeed and

178、ease of access to financingFront-line expertiseGlobal footprint and partner networkSeamless digital experienceEasy to understand/tailored product rangeAncillary services(e.g.,advisory,trade analytics)Platform/ecosystem connectivityWhat do your customers care most about?272226181821354762482910794211

179、2110184107834111111118435715561738354597385410859212345Customer servicing dimensionSource:ICC&BCG Trade Survey,August 20242024 ICC Trade Register Report20Basel IIIEmerging regulation on capital treatment has recently been in the spotlight,as regulators navigate the implementation of the Basel Commit

180、tee on Banking Supervision(BCBS)s Basel 3.1 reforms.These reforms aim to enhance the banking sectors resilience by tightening capital requirements and introducing more stringent risk assessment methodologies.A key component of the reforms is the revised standardised approach to credit risk,which wou

181、ld limit the extent to which banks are able to benefit from internal models used to calculate risk-weighted assets(RWA)that may vary from standardised calculations.Under the reforms,banks would be required to hold,at a minimum,50%of capital under the standardised approach,increasing gradually to 72.

182、5%by 2028.These regulations are expected to increase capital requirements for trade finance products,particularly products like receivables finance,which benefit from low RWA under internal models.Because banks will no longer benefit from the favourable capital treatment of such products,they are li

183、kely to incur increased capital costs,which may result in higher pricing for borrowers;indeed,some banks are already demonstrating this impact.As a result,products such as receivables finance may become decreasingly worthwhile for financial institutions to offer in comparison to simpler products,suc

184、h as overdrafts.For global banks,emerging regulation on capital treatment is therefore seen as the biggest threat to business.21Regulators are still in the process of finalising the full implementation of these reforms,with ongoing discussions regarding the specific details and timelines.The shape t

185、hese reforms will ultimately take,especially across different jurisdictions,remains to be seen and banks will be closely monitoring these developments to assess how they will impact their operations.Late Payment DirectiveThe European Commissions proposed revision of the Late Payment Directive also b

186、egan to take shape in September 2023 and remains under review as of October 2024.The proposal seeks to reduce the maximum payment term from 60 days(unless previously agreed by relevant parties)to 30 days,aiming to protect SMEs from long payment delays that can strain cash flows and threaten financia

187、l stability.The 30-day term would apply to most B2B transactions,with exceptions for specific sectors like retail,where payment terms of up to 120 days may be negotiated due to factors such as low product turnover or seasonal fluctuations.The revision also introduces automatic interest and compensat

188、ion for late payments,prohibitions of bans on assignment of receivables,and strengthens enforcement mechanisms to safeguard creditors,especially SMEs.Momentum in this space is not confined to the EU,as other jurisdictions,including the UK,work through potential new measures to crack down on late pay

189、ments.21 Source:ICC&BCG Trade Survey,August 2024.ICC Contributes to Emerging Regulations on Capital TreatmentThis year has been exciting for ICC,as the organisation has played a key role in shaping emerging regulations,particularly on implementation of Basel III reforms.In 2023,ICC contributed to th

190、e EUs CRR3 outcomes,and it continues to consult with the European Banking Authority(EBA)as these regulations evolve.The PRA also set out its near-final UK rules on Basel 3.1 in September 2024,recognising ICC and GCDs Performance Guarantees study as a key factor in shaping the regulation.For trade fi

191、nance-related activities,the PRA is now likely to adopt lower capital requirements,decreasing the credit conversion factor(CCF)to 20%,from the 50%initially proposed.The benefits of this could see banks saving as much as$2.5-3 billion capital for their UK business,reflecting an annual$300 million cos

192、t of capital saving.The use of high-quality,validated data-collected in collaboration with banks-has now been formally acknowledged by regulators,underscoring the value of accurate data in improving risk management and enabling banks to make better-informed decisions in line with regulatory standard

193、s.2024 ICC Trade Register Report21There is concern within the industry,however,that shorter payment terms could reduce returns for financial institutions,potentially discouraging banks from offering supply chain financing(SCF)programs,as the reduced profitability may not justify the operational and

194、credit risks involved.If SCF programs become less appealing to lenders,companies could struggle to secure this type of financing,turning instead to less favourable traditional financing methods that are more costly or appear directly on their balance sheets.While the EU legislative process is still

195、ongoing,strong opposition to the proposal has been voiced by industry stakeholders,which has been echoed by some members states.As amendments are expected,ICC continues to monitor developments and will provide regular updates.Digital trade,MLETR,and related regulationMomentum continues to grow aroun

196、d the digitalisation of trade to drive efficiency,speed,and resilience.At this point,particularly in the wake of the pandemic,banks have made substantial progress at digitising elements of paper-based trade,but this has largely focused on automated data capture through AI-OCR.However,to enable real-

197、time access to and verification of information,which is the true target state for digital trade,processes will need to be“digitalised”and reinvented with structured data and API-based networks.To date,barriers to the comprehensive digitalisation of trade include the lack of a policy environment to s

198、upport it,the proliferation of multiple digital trade practices and standards,a lack of capacity,and multiple(often but not only regulatory)bottlenecks to data sharing.22 In this fragmented environment,trading partners are disconnected unless they use the same platforms,creating“digital islands”.To

199、move between islands typically requires processes involving either paper documentation or electronic paper substitutes.Because of the sheer number of participants from multiple geographies involved in trade transactions,the end-to-end digitalisation of trade interactions will require systemic collab

200、oration.Momentum is growing,with a final agreement expected in 2024 on the WTOs Joint Initiative on E-Commerce,a 91-country agreement to digitalise trade processes and documents.23Model Law on Electronic Transferrable Records(MLETR)The UNs Model Law on Electronic Transferable Records(MLETR),aiming t

201、o establish the legal validity of digital trade documents across borders,is a huge step in the right direction towards digital trade.However,80%of survey respondents believe that while MLETR principles will help pave the way,they will not significantly accelerate the digitalisation of trade simply o

202、n their own.24 The trade ecosystem from corporates,shipping companies,insurance brokers to banks will need to overcome several obstacles before material benefits can be realised.First,realising material benefits will require full corridor adoption.Although several countries have incorporated,or are

203、in the process of incorporating,MLETR principles into their national legal frameworks,there is not yet ubiquitous adoption.As trade is often conducted between highly developed and less-developed nations,a disparity might emerge in the speed of adoption.Second,trading businesses will need to go beyon

204、d legal alignment and change their processes and technologies.This transformation will likely by enabled by the progressive proliferation of successful cases,such as from large-scale eBL adoption(as spearheaded by the FIT Alliance)or one supply chain at a time,with lighthouse buyers leading the way.

205、Technology is a limitation in certain cases;for example,there is not yet a clear process for confirming the transfer of ownership of a digital trade document.Blockchain,tokenisation,shared platforms,and other digital technologies will be potential solutionsbut so far,they have proven unable to scale

206、 due to the complexity of onboarding the whole trade ecosystem.It will take collaboration at a systemic level to bolster full corridor and ecosystem adoption of these platforms,as was the case with Airline Reservation Systems.Third,banks will need to leverage digital to innovate their existing trade

207、 product set while rethinking markets for new opportunities.For example,there may be an opportunity to redesign 22 Source:ICC Digital Standards Initiative(DSI),Trust in Trade,March 2023.23 Source:WTO Joint Initiative on E-Commerce State of Play|International Institute for Sustainable Development(iis

208、d.org),July 2024.24 Source:ICC&BCG Trade Survey,August 20242024 ICC Trade Register Report22letters of credit to be faster,easier,and more cost-effective-making them digital by design,rather than relying on a patch job.Finally,the industry will need to confront the core challenge of structuring docum

209、ents and data for international transferability.As such,the evolution of international standards will be a key unlock to ensuring interoperability and to mitigate,dismantle,and connect digital islands.25 Indeed,standards are already progressing to support this,such as ICC and SWIFTs standard model A

210、PI for guarantees and standby letters of credit.Advances in AI and GenAI may help bridge gaps in data models,rapidly simplifying adoption(see spotlight on GenAI below).E-invoicingElectronic invoicing(e-invoicing)is also accelerating trade digitalisation,with upcoming regulations like the EUs propose

211、d mandatory e-invoicing for intra-EU trade(“VAT in the Digital Age,”or“ViDA”).The EU is expected to mandate e-invoices by 2028 to reduce VAT fraud and improve the efficiency of VAT collection.There is already significant momentum behind e-invoicing,with several EU member states,South American countr

212、ies and India mandating it,while the US,UK and parts of Southeast Asia have yet to take action.E-invoicing will hugely benefit payables and receivables finance by enhancing efficiency and speed,improving accuracy,reducing errors,improving compliance and auditability,and reducing cost-to-serve.To rea

213、lise these benefits,however,financial institutions will need to invest and ready themselves by securing data exchange platforms to send,receive,and archive e-invoices,as well as integrating invoicing processes with accounting and enterprise resource planning(ERP)systems such as SAP and Oracle.AI and

214、 Generative AI to impact tradeAI and GenAI have huge potential to impact trade,though in general these technologies are still at pilot stage and not yet operationalised at scale.There are six significant use cases for GenAI in trade,which together have the potential to unlock a major cost-saving opp

215、ortunity in end-to-end trade processes compared to non-automated paper-based trade.1.Data extraction from unstructured trade documentation:Large language models(LLMs)and GenAI could significantly enhance the accuracy of data extraction from unstructured trade documents and templates,including comple

216、x tables,images,handwritten information,and even invoices-initiatives like ICCs eRules already pave the way for this.By enabling the straight-through processing of digital documents,this would reduce manual effort and unlock real-time availability of information.262.Document checking for consistency

217、:While LLMs and GenAI have great potential to expedite and automate document checking,they have so far struggled to fully automate the process.For instance,these technologies have difficulty checking letter of credit documents under the Uniform Customs and Practice for Documentary Credits(UPC 600),a

218、s they cannot yet distinguish between established rules and customary practices.As a result,human decision-making remains essential.3.Anti-money laundering screening:AI and machine learning have already had a huge impact in this space,potentially driving a three-to five-fold increase in risk detecti

219、on and a 70%reduction in false positives,which are a significant problem for banks.27 AIs ability to process a huge amount of data has the potential to further enhance banks abilities to detect and manage emerging risk across a number of areas including detecting sanctions violations,money launderin

220、g,and fraud activity,as well as improving quality assurance processes.4.Chatbots for customers:As customers grow to expect seamless,on-demand service,GenAI can act as an always-on assistant to customers,such as providing real-time updates as well as personalised support.25 As set out in ICCs Digital

221、 Standards Initiative(DSI),Key Trade Documents and Data Elements(KTDDE),April 2024 26 Source:Trade Finance Global,Generative AI and LLMs in trade finance:Believe the hype(well,most of it)-Trade Finance Global,February 2024.27 Source:Hawk AI,How Generative AI Enhances AML,Sanctions Screening,&Fraud P

222、revention(hawk.ai).2024 ICC Trade Register Report235.Validation and assistance in contractual terms and guarantee wording:GenAI can streamline the drafting of bespoke contracts or clauses,making the process more efficient before manual validation.This could also support Smart Contracts,by enabling p

223、rogrammable activation when specific criteria are met.6.Translation between data models:GenAI could facilitate translation between different data models,helping to bridge“digital islands”and accelerate interoperability,though digital standards will still be necessary for defining common data element

224、s.As banks increasingly explore these technologies,the broader financial ecosystem is likely to see a shift towards AI-driven processes,with early adopters set to gain a competitive edge.As AI evolves,the regulatory environment and future trade finance standards will need to evolve in parallel.As cu

225、stomer demands evolve and fintech competition intensifies,banks are investing heavily in technology and digital solutions to enhance operational efficiency,streamline processes,and improve client services.This raises questions about which areas of technology will prove most transformative in the lon

226、g run.Process automation stands out as a key focus area of investment(see Figure 7),with many banks prioritising it as a tool for driving operational efficiency.As operational efficiency remains a strategic priority,this trend is expected to continue.Similarly,nearly all banks either have,are in the

227、 process of,or are about to modernise their core systems,first across documentary trade and now open account trade,to ensure that they are fit and ready for future market changes.As regulatory and legal changes like MLETR and the demands of digital trade accelerate,there is a growing sense that tech

228、nological requirements will continue to advance.While early investors may be well-positioned,new questions will emerge about how banks can adapt to keep pace with the shifting regulatory and operational landscape.Innovation is also progressing rapidly in digital trade finance offerings;once seen as

229、a competitive advantage,they are now a fundamental expectation,enhancing customer experiences whilst deriving efficiencies for banks.Even so,achieving the scale and ecosystem adoption needed for these digital offerings to succeed remains a challenge.Some distributed ledger technology and blockchain

230、platforms have faced struggles recently,including Marco Polo,we.trade,Keeping up with a rapidly evolving technological and digital landscapeFigure 7Key trends in tech and digital investmentTable StakesGrowing prioritiesOld newsExperimentsInnovationCore platform modernisation for documentary tradeFra

231、udpreventionLevel of investmentTech maturityCustomer engagementEnablersCore techIncl.data&credit risk modelsProcess automationCore platform modernisation for supply chain financeDigital customer experience(e.g.,sales and servicing channels)API developmentCore platform modernisation for receivables f

232、inanceDigital ecosystems and marketplacesAI/Gen AIDLT/blockchainTokenisationSource:ICC&BCG Trade Survey,August 20242024 ICC Trade Register Report24Contour,and TradeLens,resulting in these technologies losing momentum as banks pivot towards a“value-first,tech-second”approach.Receivables finance,suppl

233、y chain finance,and procure-to-pay are served by the most mature platforms with the largest customer and revenue numbers.Leading players are often backed by technology or banking partnerships,like HSBCTradeShift and JP MorganTaulia.The significant transaction volumes these partnerships handleTaulias

234、 cumulative transaction value tops$1 trillionclearly demonstrate commercial viability.Growth in digital offerings and platform-based trade will also lower the cost to serve smaller customers in a scalable way,ultimately helping to close the trade finance gap.The rise of ecosystems and marketplaces i

235、s reshaping how customers trade,especially in regions like Asia,where players like Alibaba,Flipkart,eWorldTrade,JD,Lazada,and Shopee are an increasingly integral part of the trade ecosystem.The potential for such global marketplaces to expand into trade finance through partnerships presents new oppo

236、rtunities for banks to acquire customers at scale and serve them directly where they do business.As innovative technologies,such as GenAI(see spotlight),become increasingly mature,and as technological solutions providers become increasingly advanced,winning in this space will likely require heavy in

237、vestment and rapid,scalable connectivity to third parties.Global banks have an advantage here,as they already spend an estimated six times more than local banks on technology and digital solutions.28 The gap between them is likely to widen,and not all players may be able to keep pace.As a result,sma

238、ller players may look to white-labelled technology as a cost effective way to remain competitive-or risk being marginalised in the longer term.The trajectory of technological advancements also points to a broader question:as innovation in trade finance continues,how will the next phase of digital tr

239、ade standards develop?Previous efforts to establish cohesive standards have faced challenges,but with the current momentum,the coming years may see a new push for standards that gain wider industry traction.Whether these efforts succeed will depend on alignment between regulatory shifts,market needs

240、,and the capacity of technology to meet the evolving demands of the trade ecosystem.Sustainability propositions in trade and supply chain financeThe momentum behind climate and sustainability remains strong,with global investments in clean energy reaching$1.7 trillion in 2023,driven primarily by gro

241、wth in solar technology and electric vehicles.Although roughly 15%of banks have fully scaled their sustainability propositions,there is a clear upward trend,with over 70%of banks either actively developing or expanding their sustainable offerings.29 Notably,banks are starting to position sustainabil

242、ity propositions as commercial opportunities,as over 90%of those already engaged in sustainable trade finance report positive growth,albeit slow-to-medium growth this year likely due to the tougher market.Decreased inflows into sustainable funds and sustainable debt issuances also suggest that highe

243、r interest rates could be impacting the pace of investment,and by extension,progress toward sustainable goals.30Nevertheless,sustainability has become a top five priority for global banks,particularly in Western Europe,where emerging regulations like the EUs Carbon Border Adjustment Mechanism are cr

244、eating new imperatives for investment and action.Regional and local banks,as well as banks in the Asia-Pacific region,have yet to prioritise sustainability in the same way,however.31Although banks are using Green Loan and Green Bond principles as the foundation for their sustainable trade and supply

245、 chain products,there remains a significant need for greater clarity and standardisation of what qualifies as“sustainable”or“green”trade finance.The inherent complexity of trade finance products makes it challenging to assess the sustainability of each transaction,particularly when the exact nature

246、of the traded 28 Source:BCG analysis.29 Source:ICC&BCG Trade Survey,August 2024.30 Source:IEA,World Energy Investment 2024,June 2024.n.b.sustainable debt issuances have seen a 23%fall from their 2021 peak,falling at a faster rate than debt issuances(18%),potentially pointing to slowed interest in su

247、stainability in a high-interest rate environment.31 Source:ICC&BCG Trade Survey,August 2024.2024 ICC Trade Register Report25good or its end use,such as cotton or fast fashion,is not immediately clear.BCG estimates that only approximately 3%of trade can be definitively classified as sustainable,while

248、 roughly 25%is clearly unsustainable(see Figure 8).The remaining 75%or so exists in a grey area of“potentially sustainable”trade,where goods and services could meet sustainability criteria with the right certifications,such as the Better Cotton Initiative.The revision of ICCs Principles for Sustaina

249、ble Trade this year,in collaboration with leading banks,represents an important step towards addressing this uncertainty.The Principles of Sustainable Trade Finance framework aims to equip banks with the tools to evaluate“potentially sustainable”transactions,improve access to green trade finance,and

250、 increase confidence in the rigour of sustainable trade finance decisions.In line with the International Institute of Finances call to action,it is increasingly clear that the shift towards sustainable trade needs to be driven by demand-side adoption,with banks playing a key role as facilitators of

251、sustainable trade,helping drive broader industry uptake of sustainable practices.32Figure 8Estimated sustainability of global trade32 Source:Institute of International Finance,IIF Staff Paper:Resetting the debate on the role of private finance in the net-zero transition,September 2024.How sustainabl

252、e is trade?Rapid growth in clearly sustainable tradeClearly SustainablePotentially SustainableClearly Unsustainable20182019202020212022202326.3%28.7%28.0%25.6%22.6%22.6%72.3%69.9%70.5%72.5%74.4%74.3%1.3%1.4%1.5%1.9%3.0%3.1%Potentially Sustainable Clearly Unsustainable Clearly Sustainable1.3%1.4%1.5%

253、1.9%3.0%3.1%26.3%28.7%28.0%25.6%22.6%22.6%72.3%69.9%70.5%72.5%74.4%74.3 30%70%80%2018 2019 2020 2021 2022 2023 0%20%of Global Trade-3%CAGR19%CAGRSource:UN Comtrade,BCG Analysis.Based on$US of trade across all types of trade within UN Comtrade Database2024 ICC Trade Register Report26Assessing the sus

254、tainability of a trade transaction second year of ICCs sustainability taggingFor the second year,the Trade Register reports on the sustainability of export finance products,with the majority of members continuing to submit sustainability tags.GCDs data collection process includes the option for memb

255、er banks to tag transactions as sustainable if they comply with any of the following criteria:1.The Loan Market Associations criteria such as the Green Loan Principles,Sustainability-linked Loan Principles,or the Social Loan Principle2.Formal designations from Export Credit Agencies or Multi-lateral

256、 Agencies,preferably based on a third-party review3.Formal third-party verification of a transactions sustainabilityAmong the tagged transactions,the proportion identified as sustainable continued to increase,which points to the continued momentum behind sustainability in global trade.As data collec

257、tion expands and tracking tools become more refined,ICC aims to provide a fuller understanding of the sustainability of global trade transactions,as well as whether sustainable transactions demonstrate favourable risk characteristics.2024 ICC Trade Register Report27Credit Risk in Trade FinanceThe IC

258、C Trade Register Report presents a global view of the credit risk profiles of trade finance,supply chain finance,and export finance transactions.It demonstrates the low risk of the transactions that enable global trade,and the trillions of dollars in economic value that flow from these commercial ac

259、tivities.The report draws on data from 26 trade finance and export finance banks(including submissions from todays 22 member banks)33a representative set of more than 47 million global trade finance and export finance transactions with exposures in excess of$23 trillion.The combination of import let

260、ters of credit,export letters of credit,performance guarantees,and supply chain finance exposures in the Trade Register amounts to approximately 23%of global traditional trade finance flows and 7%of all global trade flows in 2022(see Figure 5).Global Credit Data(GCD),BCG,member bank specialists,and

261、the ICC Banking Commission project team and advisors analysed the data.7.Credit Risk in Trade Finance33 22 member banks contributed to the report in 2023,but the ICC Trade Register contains data from 26 banks in total across all years.34 Total global trade flows based on BCGs Global Trade Model.Prod

262、uct2023 exposures in Trade Register($trillion)Estimated share of 2023 trade finance,by product(%)Estimated share of 2023 total global trade flows(%)34Documentary trade0.4216%1%Open account trade and SCF payables finance1.1816%4%Total1.6016%5%Figure 1Estimated coverage of ICC Trade Register in 2023(p

263、roducts grouped to enable like-for-like comparison)The methodology used is largely consistent with the approach used in past years.Over time,the Trade Register has evolved to align more closely with the Basel framework,whilst also providing a practitioners view of credit risks within trade finance a

264、nd export finance.2024 ICC Trade Register Report28The report format has varied,but the objectives of the Trade Register are the same:To provide an objective,transparent view of the credit-related risk profile and characteristics of trade finance and export finance,using a rich,data-driven approach t

265、hat contributes to relevant,well-informed policy and regulatory decisions To advance an understanding of trade finance and export finance,its importance to global trade,and its highly effective global risk mitigation capability To promote an appreciation of the international regulations impacting ba

266、nk capital requirements for trade finance and export finance,together with the history and objectives of these regulations,in order to create a uniform global view of this industry as part of the ICC Banking Commissions commitment to effective and collaborative advocacy To be an external benchmark b

267、anks can use to validate outputs from internal risk and expected credit loss modelsThis years report continues to reflect a key finding from past years:that trade finance and export finance represent a low-risk asset class even during times of market uncertainty.It should be noted that an increasing

268、 number of investors are using the Trade Register and its data for making investment decisions.Given the data limitations outlined below,ICC recommendsand strongly encouragesthe use of the reports data and information for research purposes only and not to inform investment decisions.The resilience o

269、f trade financeTrade FinanceLooking long term,risk in trade finance,defined as the weighted average of exposure weighted default rates,has generally followed a function of business confidence(inverted to reflect risk to business confidence),global GDP growth(similarly inverted to reflect risk to GDP

270、 growth),and geopolitical risk.While there is a correlation across these metrics,risk in trade finance is shown to be more resilient,and less volatile given the broader factors that impact trade.For example,while risk in trade finance saw a recent peak during the COVID-19 pandemic,it has proved more

271、 resilient to recent sspikes in geopolitical frictions,such as war in Ukraine,where risk in trade finance stayed in line with the historic average.Figure 9Trade finance credit risk index1.Average exposure weighted default rate across all products;rates weighted to total exposure per product;Export F

272、inance is excluded due to temporal lag in data submission resulting in no data availability for 2023Source:OECD,World Bank,Geopolitical Risk Index,ICC Trade Register 20240.00%0.25%0.50%0.130%-10%0%10%-3%0 100 105 1002008200920102011201220132014201520162017201820192020202120222023 0 100 160 96Financi

273、al Crisis BrexitCOVID-19 PandemicRussian Invasion of UkraineRisk in Trade FinanceInverse Business Confidence IndexInverse global GDP GrowthGeopolitical Risk Index2024 ICC Trade Register Report29Import letters of creditGlobal exposure-weighted default rates for import letters of credit decreased from

274、 2022 to 2023 to just above the seven-year average(2017-2023).On an obligor-weighted basis,however,default rates went up marginally to the seven-year average.Most significant is the sharp increase in default rates on a transaction-weighted basis.The decrease in exposure-weighted defaults coupled wit

275、h an increase in transaction-weighted defaults may be indicative of higher medium-size corporate defaults.By region,defaults were largely concentrated in Europe and the Asia-Pacific region,with the most notable uptick in Europe across all three dimensions likely linked to the European Banking Author

276、itys(EBA)Days Past Due(DPD)changes increasing technical defaults.Export letters of creditAs historically observed,default rates for export letters of credit are significantly lower than for other trade finance products.This was particularly true in 2023,when there was a negligible increase in exposu

277、re-weighted defaults relative to 2022.In 2023,both obligor-weighted and transaction-weighted defaults dropped to their lowest rates since 2018 and 2012,respectively.Defaults were almost entirely concentrated in Russia,which,though slightly lower than in 2022,point to the settlement of any outstandin

278、g products following sanctions on Russia.Loans for import/exportDefault rates for loans for import/export saw a slight decrease in 2023 relative to 2022 on an exposure-weighted basis,remaining slightly elevated in contrast to pre-pandemic levels but well below the 2020 peak at the start of the pande

279、mic.Transaction-weighted defaults have seen a sharper increase to a near-2020 peak.On an obligor-weighted basis,however,loans for import/export saw a significant decrease to their lowest level since 2011.These trends point to a few obligors defaulting on numerous transactions across large supply cha

280、ins.Defaults were largely concentrated with the largest uptick in Africa and the Middle East.In Africa,an increase in defaults was spread across a number of countries,many of which in debt distress.35 In the Middle East,defaults were concentrated in Qatar,with a single obligor default likely linked

281、to construction following the 2022 FIFA World Cup.Performance guaranteesDefault rates for performance guarantees(including standby letters of credit)decreased in 2023 relative to 2022 on both exposure-and obligor-weighted bases,to their lowest levels since 2019 and 2011,respectively.On a transaction

282、-weighted basis,however,there was a slight increase from 2022,though levels remain below 2019 highs.These increases were largely driven by Asia-Pacific and Europe.In Asia-Pacific,the decrease in exposure-weighted defaults was driven by a drop in Chinese defaults following a spike in 2022,whilst the

283、marginal increase in obligor-weighted and transaction-weighted defaults was driven by an uptick in Australia.In Europe,despite an overall decrease in defaults on exposure-and obligor-weighted bases,France and Italy experienced increases across various measures,likely linked to the EBAs DPD regulatio

284、n.Russia also saw a significant spike in default rates,likely due to the longer-term nature of performance guarantees,which introduces a lag between the implementation of sanctions and the realisation of unresolved defaults.Loss Given Default and Expected Loss AnalysisThe approach to Loss Given Defa

285、ult(LGD)and Expected Loss(EL)in this years Trade Register is consistent with last year,working with the GCD database,which includes historical data for the period 2000-2022.GCD takes a bottom-up approach to calculating LGD,which uses raw and non-aggregated information.It collects all the relevant fa

286、cts(covering more than 130 different data fields)related to a default and the cash flows that occurred after default,in a way that reflects the full complexity of the legal relationship between a bank lender and a borrower.This granular approach provides more reliable analysis because it does not re

287、ly on banks own reporting of the LGD level.It therefore ensures comparability across banks,homogeneity in the application of the formula,and replicability.The methodology allows for the inclusion of LGD analysis for documentary trade products,as well as supply chain finance and export finance.Given

288、the Trade Register reports LGD and EL on a long-term basis of 20 years or more,the figures in this years Trade Register are largely unchanged from last year.35 Source:World Banks Debt Suitability Analysis,September 20232024 ICC Trade Register Report30Analysis of Supply Chain Finance(SCF,payables fin

289、ance)In 2021,global default rates for SCF payables finance were low on all three measures.On an exposure-weighted basis,default rates remained in line with the low levels observed since 2021.Obligor-weighted default rates fell back to levels observed in 2021,following a 2022 spike.Transaction-weight

290、ed defaults also saw a slight decrease in 2023.These trends point to the low-risk nature of SCF products.As observed in last years report,SCF payables finance remains among the lowest-risk trade finance products on an exposure-weighted basis,with a default rate only marginally above that of export l

291、etters of credit.Whilst some caution needs to be applied to the smaller comparative dataset(as a matter of comparison,SCF payables finance exposures are roughly 55%of those for import letters of credit in this years Trade Register),a likely driver is that for an SCF transaction to be in default,the“

292、buyer”needs to be in default.In most cases,this is a large corporate with an already high credit rating.Without a high credit rating,a corporate would typically be ineligible for SCF.By nature,SCF payables finance is typically skewed to well-established businesses with a large volume of repeat custo

293、mers,which again typically have relatively low default rates compared to newer,less stable,or rapid-growth businesses.In addition,and unlike in the receivables finance and factoring business,dilution risk is virtually non-existent,since SCF transactions are only initiated by the buyer upon successfu

294、l execution of the underlying trade.Analysis of export financeThe findings in this years report continue support the longstanding conclusion that export finance presents a low risk for banks.This results from its low EL,which derives from a low LGD,combined with a default rate comparable to lower th

295、an investment grade project finance and corporate finance assets.Export finance has a particularly low LGD,as most transactions are guaranteed by export credit agencies at up to 100%of their value(and an average of 94%in the Trade Register sample),which grants the banks the capacity to be indemnifie

296、d by an Export Credit Agency(ECA)for up to a specified level of cover.Although it is difficult to draw reliable conclusions for individual years from the data available,export finance saw slightly elevated defaults rates in 2023 across all three measures(exposure-weighted,obligor-weighted and transa

297、ction-weighted),bringing default rates roughly in line with the long-term average and continuing the slight upward trajectory also observed in 2022.Africa is the key driver of the increase in default rates across export finance,with an increase across all three measures,in part driven by sovereign d

298、efaults in Ghana.Whilst there was an increase in both Asia-Pacific and Europe on obligor-and transaction-weighted bases,these remain below the ten-year average.Asset distributionIncreasingly,asset distribution is becoming a critical strategy for mitigating risks in trade and supply chain finance by

299、diversifying exposures across a broader investor base.As both banks and investors seek to optimise returns and better serve corporate customers,there is growing interest in asset distribution as a way to manage balance sheets more effectively.This approach is becoming more common,particularly in lar

300、ge supply chain finance programs and unfunded contingent liabilities,where the need for risk management is paramount.However,banks typically face two significant challenges when scaling up asset distribution efforts:1.Technology barrier:Most asset tagging and distribution engines are developed in-ho

301、use,as there are limited vendor options available on the market,making the barrier to entry high for many institutions.2.Operating models:Banks need to develop new operating models,with dedicated teams either within the transaction bank or the markets division to engage with investors and drive dema

302、nd on the front line.By overcoming these challenges,banks can unlock greater returns and significantly enhance their ability to manage risk exposure,making asset distribution a crucial component of modern trade and supply chain finance strategies.2024 ICC Trade Register Report31Steering views from D

303、avid Quehenberger,Global Steering&Innovation Lead in Swiss Re Corporate Solutions Trade Finance&Working Capital Solutions team How does one navigate the challenge of portfolio steering in a book as diverse as Trade Finance&Working Capital Solutions?And,more importantly,how can it generate value for

304、the business and clients?My experience in the mountains helps!The compass guiding us through this terrain is proper segmentation.To start with,let us divide our exposure into two areas of roughly similar size:1)credit risks tied to Financial Institutions(FI)as obligors versus 2)credit risks tied to

305、Corporates as obligors.1.Documentary Trade Finance in focus with non-trade FI expansionWithin the realm of FI,Documentary Trade Finance takes center stage meaning emerging market export/import transactions supported by letters of credit,standby letters of credit and trade loans.In addition to an obl

306、igor banks credit profile,there is a strong country-risk element inherent to trade lonance.We must carefully balance total exposure against a countrys population,economic size,trade needs and ability to generate foreign exchange.Strict monitoring of tenor profiles enables our clients and us to stay

307、reactive and quickly up-or downsize exposures in line with market,trade and political dynamics.Navigating the mountains of our Trade Finance&Working Capital Solutions portfolio 2024 ICC Trade Register Report312024 ICC Trade Register Report32These more structured data topics hinge on static data like

308、 financial statements and credit ratings.We also incorporate live,unstructured data.For example,we use an AI-driven solution to turn thousands of news articles into targeted and actionable early warning signals across our portfolio via updated credit scores.This steering technique is used on both ou

309、r FI and Corporate obligor portfolio.We then can consider the impact of major events like elections,wars,localized turbulence,supply chain impacts,weather events and other similar topics improving our decision-making and risks management.We constantly assess and discuss with clients,whether these ev

310、ents are mere ripples on a continued growth trajectory or harbingers of a debt storm brewing in emerging markets?Part of our strategy in FI includes further diversifying our book into non-trade related exposures,through a focus on special purpose loans and better rated credit profiles.2.Building our

311、 recurring renewal book for Corporate RisksOn the Corporate risk side,we are looking to continue our successful growth story with a prioritization for trade-related transactions that revolve year on year.However,we also have an emphasis on growth in the short to medium tenor non-trade term loan and

312、revolving credit facility space targeting investment grade risks.Achieving diversification among corporate industry segments can present a challenge for insurers,as we are not in the business of originating deals ourselves and sometimes grapple with concentrated spikes in demand.This year we saw tho

313、se spikes particularly in well-rated automotive-related risks for example.Therefore,steering remains a crucial element to our profitability and ability to consistently deliver to our clients whether its balancing growth opportunities with accumulation risks across complex supply chains,preparing for

314、 changing business propositions such as subscription models,or ensuring our portfolio develops in line with Swiss Res ESG ambitions.In all these cases,the key enabler is data visualization and data transparency,areas where were very proud of our recent achievements and can see the benefits in speed

315、of decision taking and confidence in our monitoring ability.This allows us to be customer-centric in our steering.For example,we use detailed live reporting on the tenor profiles of our portfolio against industry,product and other attributes to monitor client trends.In the automotive space,we have b

316、een closely tracking the underlying transaction tenors,the insurance policy tenors as well as the clients timelines for cancellability.This gives us comfort even if we are in a peak of exposure based on current client needs.This tenor data also clearly shows the importance of our activities in recei

317、vables finance and portfolio underwriting as a complementary and diversifying factor to the often medium to long-tenor loan and RCF exposures.The ICC Trade Register is another piece of the data puzzle that enhances our positive story.One other customer-centric use of data is tracking our exposures a

318、gainst appetite closely.This has allowed us to take the step of becoming more proactive in reaching out to our brokers and the market through reverse enquiries.This is where we say to our brokers and clients,we have available capacity on these obligors,can this insurance capacity be utilized support

319、 your business?.One thing is clear through it all only by staying close to our clients,brokers and partners like ICC,will we be best positioned to weather whats coming and thrive on the opportunities that arise in the global world of trade and working capital solutions.To discuss more,reach out to D

320、avid at David_Q or via LinkedIn here:David Quehenberger|LinkedIn2024 ICC Trade Register Report322024 ICC Trade Register Report338.Access to Proprietary Trade Finance Risk DataICC offers access to a comprehensive dataset on trade finance default rates collected through contributions from member banks

321、.This dataset provides granular insights into defaults across trade finance products,including regional breakdowns and analysis by bank type.It also helps identify the causes of defaults and distinguish between systemic risks and isolated events,offering significant value to banks seeking to enhance

322、 their risk models and make informed decisions in the trade finance space.Access to the full dataset is available exclusively to member banks or by purchasing the dataset,as it reflects the collective effort of institutions that contribute their data.Expanding membership remains a key priority for I

323、CC,with the goal of growing the dataset to more accurately reflect the global trade finance market.To gain access to the full dataset and insights,please contact the ICC Secretariat about becoming a member.Figure 10Data pack contains default rate analysis split into 3 key sections in standardised fo

324、rmat,with additional sections on LGD analysis at product levelOverviewProduct breakdown by RegionRegion x Product Deep DivesProduct level overviewLGD Analyses2024 ICC Trade Register Report349.Future of the Trade RegisterThe ICC Trade Register continues to evolve,providing essential data and insights

325、 into the credit risk characteristics of trade finance products.It now covers six trade,supply chain and export finance product groups across over 200 geographies,with a database representing 5%of the global trade flows and 18%of financed trade flows.The Trade Register remains committed to improving

326、 the understanding and awareness of risk in trade finance for financial institutions,investors,and regulators,while maintaining an attractive value proposition for its member banks.In 2024,the Trade Register made significant progress as it continued to work with GCD,BCG and member banks to improve t

327、he quality of the dataset.Notably,ICC and GCD data was recognised for its contributions to regulations,including Basel III reforms.Additionally,the ICC and BCG Trade Survey,with input from around 200 practitioners from the Banking Commission,provided fresh insights into trade finance,with plans to e

328、xpand its reach further.The project also incorporated sustainability tagging for export finance products,marking its second year of tracking sustainable transactions.Looking ahead,the Trade Register aims to enhance the project through several initiatives:Participation:Expanding participation among m

329、ember banks to grow the data pool and market coverage,improving the reliability of results and supporting advocacy with regulators,a critical objective of this work.Scope and readership:Expanding the reports scope to become the leading publication on global trade.The Trade Register is also exploring

330、 opportunities to provide data beyond risk metrics,including operational efficiency and sales productivity,to offer a more comprehensive view of trade finance.Methodology:Refining the methodology to incorporate legal entity identifiers where data protection regulations allow helping to remove duplic

331、ation across banks.Product Coverage:Improving product coverage,particularly of receivables finance,and exploring partnerships with insurers to include trade credit insurance,providing a fuller picture of trade losses.As we look to refine the reporting on SCF products,including payables and receivabl

332、es finance,we will be looking for guidance from our member banks on how best to report across their product ranges.SME Tagging:Addressing the current limitation by tagging SME transactions to enable the project to distinguish between corporate and SME defaults and determine the risk characteristics

333、for SME trade.This will hopefully allow the project to demonstrate the low credit risk comparable to other products and support improved regulatory treatment for SME financing to help close the Trade Finance Gap.2024 ICC Trade Register Report35As the Trade Register continues to grow,it remains committed to being the leading global resource for understanding and managing risk in trade finance.As ev