According to the International Chamber of Commerce (ICC), around $5 trillion of trade credit will be required to facilitate a rapid recovery from the Covid-19 crisis.
Despite welcoming the actions taken during the initial phase of the crisis, the ICC says there is still a strong case for state intervention.
Christoph Gugelmann, chief executive at Tradeteq – which has called for a greater distribution of trade finance assets to non-bank investors – agrees that governments have to play their part in supporting banks to extend trade finance.
“Government-backed access to trade finance funds will support economic growth and international trade, and as this is based on the flow of tangible goods and products there is a relatively low risk of default,” he says. “Such support would alleviate financial pressures on small and medium-sized enterprises.”
Michael Vrontamitis, Standard Chartered |
Michael Vrontamitis, head of trade Europe and Americas at Standard Chartered, says that without government intervention in backing trade credit insurers there will likely be a big reduction in credit in the market, which would make a recovery much harder and slower.