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New Roadmap for a Sustainable Comprehensive World Economy: Report

A recent report by McKinsey & Company has released a new roadmap for rethinking world trade finance for a more sustainable and inclusive world economy. This report is a year-long effort aimed at raising awareness and addressing the challenges faced by small and medium-sized enterprises (MSMEs), especially in emerging markets.

A McKinsey & Company report related to the International Chamber of Commerce (ICC) and Fung Business Intelligence outlines a new vision for the global trade and finance ecosystem.

The configuration described in the report is built on three main logical blocks. The first is the Digital Trade Enabler, the standard that enables the digitization of both trade finance and global trade as a whole. Second, the criteria that enable the specific digitization of the trade finance industry. Third, best practices for trade finance interoperability. McKinsey & Company states in its report that governance may be provided by a single global industrial entity or consortium.

This report is based on more than 150 interviews with end users and subject matter experts from 12 countries, as well as a process of conception and review targeting trade, financial and technology leaders.

“The difficulties faced by SMEs in accessing trade finance are becoming an accepted aspect of international commerce since the global financial crisis. Today’s report is a direct challenge to this situation — presumed. Set a roadmap for systematic changes to address the root cause of the $ 1.7 trillion trade-financial crisis. If you want to enable trade as a true vector of peace and prosperity in the wake of COVID-19. It’s time to stop applying adhesive plasters and tackle the need for major market reforms and effective digitization that are currently unable to meet the needs of the real economy. “ John Denton, ICC’s Sec Gen, Said.

According to the Asian Development Bank, the trade finance gap reached $ 1.7 trillion in 2020, increasing from 8% in 2018 to 10% of global trade commodities. MSME accounts for 40% of bank refusals to apply for trade finance.

Today’s trade finance system is characterized by a complex web of manual processes decades ago and a more recent isolated “digital island” (a trading partner closure system formed to address specific issues). Can be attached. Therefore, this report provides a roadmap for digitally connecting and facilitating interoperability between existing networks through a set of shared standards, processes, protocols, and guiding principles.

“World trade is under tremendous tension, and there is an urgent need to review and modernize the financial system that underpins the vitality of the world economy. Buyers and suppliers have more liquidity, lower costs, more. We want less trading complexity and greater availability to the credit market. The entire trading ecosystem needs to be much more efficient and benefit from digital innovation. “ Victor Fung, Co-Chair of ICC ATF, Said.

“We are proposing real-world solutions, many of which already exist in some form, to address long-standing problems in global trade finance. The reports include existing and future standards, protocols, and And aims at a global framework of principles. Connecting all those who participate in the global trade and finance ecosystem to both current and future networks. This can be a complex project, however. The benefits are broad and profound, and the award is a more sustainable and inclusive global economy. ” Bob Sternfels, McKinsey’s Global Managing Partner Said.

Fiber2Fashion News Desk (RR)

New Roadmap for a Sustainable Comprehensive World Economy: Report

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