One of the most interesting sessions at the recent Sibos meeting looked at whether decentralized global trade finance would lead to cost-efficient financial intermediation and financial inclusion, or increased systemic risk and heightened liquidity, cybersecurity, anti-money laundering (AML), counter-terrorist financing and legal uncertainties.
Speaking to Euromoney after the conference, several leading transaction banks on the panel pointed out that notable challenges remain when it comes to being able to trace all elements of a trade transaction from beginning to end.
Ope Olomo, director of trade innovation and strategic partnerships at Citi treasury and trade solutions, observes that the trade ecosystem is still heavily fragmented.
If the smart contract exhibits an error … it is unclear how this can be conducted in a system with no centralized authority to enforce it
“For blockchain technology to solve the problems of transparency and traceability, all ecosystem participants would be required to be on the network to submit, receive and record information,” he says. “Many are not on blockchain networks and, furthermore, the networks that exist today are not interconnected because of lack of interoperability and standardization.”
The
