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Please fill E Cevas form for this course. Thank you. Please view your carrymarks (the mark is not final)

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Please fill E Cevas form for this course. Thank you. Please view your carrymarks (the mark is not final)

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Make sure everyone have filled up Ikrar Integriti form and signed on it. Please make sure also that you have already attached your team role play script too at the Team's Google Sheet beside your Video Link. Do complete the Peer Assessment Role Play Google Form. Thank you.

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Make sure everyone have filled up Ikrar Integriti form and signed on it. Please make sure also that you have already attached your team role play script too at the Team's Google Sheet beside your Video Link. Do complete the Peer Assessment Role Play Google Form. Thank you.

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Quiz 2. Class time from 11.30am to 12.50pm (1 hour 20 minutes)Topic 9, 10 & 11 on 6 July (Wednesday). Multiple Choice Questions. Answer the quiz in UUMOL.

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Quiz 2. Class time from 11.30am to 12.50pm (1 hour 20 minutes)Topic 9, 10 & 11 on 6 July (Wednesday). Multiple Choice Questions. Answer the quiz in UUMOL.

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Join a game of kahoot here. Kahoot! is a free game-based learning platform that makes it fun to learn - any subject, in any language, on any device, for all ages!

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You can get your certificate of completion for Topic 11 when you get 70% or more for answering questions in this link. If you did not pass, you may try again in 24 hours. No dateline. Have fun learning.

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You can get your certificate of completion for Topic 11 when you get 70% or more for answering questions in this link. If you did not pass, you may try again in 24 hours. No dateline. Have fun learning.

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You will get a certificate of completion if you have scored 70% and above. The certificate will be automatically sent to your email. You may only do this challenge once in a day if your score is below 70%.

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Trade-Financing Facilities: A Counter-Cyclical Role in the Current Global Context?

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Trade-Financing Facilities: A Counter-Cyclical Role in the Current Global Context?

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https://ecdpm.org/great-insights/multiple-dimensions-trade-development-nexus/trade-financing-facilities-counter-cyclical-role-current-global-context/

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Alvarez, A.M. 2013. Trade-financing facilities: A counter-cyclical role in the current global context?. GREAT Insights, Volume 2, Issue 8. November 2013. Maastricht: ECDPM.
There have been several efforts from the international community to counteract the effects of the global financial crisis; firms operating in developing countries, which rely heavily on trade finance to support exports and imports, still face the lack of finance necessary to cover their financing needs. This situation hinders them to maintain their production and trade activities. The trade finance formula
How does trade finance support production of goods and services from developing countries? Trade finance refers to methods and instruments designed to support importers and exporters through the trade cycle. Exporters extend credit to importers until they pay, and at the same time, they need to finance their own import and purchase of raw materials and production to support their export sales. The transaction encompasses a circuit where firms extend credit and secure financing to customers and simultaneously receive credit from their suppliers. On both sides the transaction involves the risk of non-payment and therefore, can generate shocks.

Trade financing involves a wide array of instruments, structures and mechanisms, depending on the parties to the transaction, the sector, country of destination, term and conditions of the contracts, etc. Generally, the most important issues behind trade financing are financing the cash-to-cash cycle of the exporter and importer, as mentioned above, and risk mitigation needs related to the importer and/or the importer´s country (country risk and commercial risk). The general premise is that exporters want to accelerate their cash-to-cash cycle, thus seeking shorter tenors as well as lower as much as possible the risk profile of a trade transaction, and importers need to extend the payment tenors.
A bipolar world of access to trade financing
Large corporations, retailers and traders, at the helm of the global supply chains (GVCs), have succeeded in building a strong network of banks over the years and therefore have excellent access to a wide variety of financing structures and channels, which protect them even in times of crisis. Unfortunately the majority of the small and medium size enterprises (SMEs), mostly in the least developed countries (LDCs), are in the opposite situation. Besides being weaker financially wise and in higher risk countries, they lack the necessary formation and information of available trade financing products. To make it worse, the potential volumes are small as compared to the first group, therefore lacking the necessary leverage to insure access to banks and trade financing lines with interesting tenors and products. Hence the GVCs and related financing are dominated by large corporations and their network of banks with very little inclusion of SMEs which, when included, are obliged to accept difficult trading conditions with long repayment tenors when exporting or short payment terms when importing, all of this under very limited financing access.
Accessing international value chains through trade financing
The intermediation of financial institutions is therefore needed because of the opposite necessities on both sides of a trade transaction. Trade financing structures and products allow the parties in a transaction to maximise their working capital cycles, and also mitigate the risks involved in a transaction, shifting the risk away from the trading partners to a financial institution. To achieve that purpose there is a diversity of financial agents, from private and government owned banks, ExImbanks and DFIs, to trade financing funds, among others.
The role of government owned and multilateral trade financing agents
A number of multilateral development banks have played a key role in ensuring trade financing flows in the post-financial crisis period. This has been translated into an expansion of trade-finance facilitation programmes by these institutions. In this regard, the G-20 Summit's Initiative (2009) was useful to mobilise additional short-term finance and guarantees to support trade. The role played by the Trade Finance Facilitation Programs of institutions such as the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter American Bank, the Islamic Development Bank, and the World Bank, have been widely recognised. These institutions have been supporting the Aid for Trade (AfT) Initiative launched in Hong Kong in 2005.

There are also a number of development finance institutions (DFIs) and ExImbanks from developing countries and emerging economies focusing on supporting trade in goods and services, including through GVCs; increasing the internationalisation of SMEs and its integration into GVCs, and developing infrastructure projects (energy, transports, communications), among other domains. Given that their membership is composed almost exclusively by developing countries and emerging economies, DFIs and ExImbanks can assess better the needs and priorities at country and regional level, and this may also give a signal to enhance the institutions, including an increase in resource allocation. Some of these institutions also follow solidarity and regional integration as a guiding principle for their cooperation initiative, and embrace socially inclusive goals. This is, for example, the goal of the proposed Bank of the South and the Bank of the Bolivarian Alliance for the Peoples of Our Americas ( Spanish : Alianza Bolivariana para los Pueblos de Nuestra América, or ALBA).

Support from DFIs and ExImbanks to trade in goods and services of developing countries, particularly LDCs, and emerging economies is required in every phase of the production process; this becomes crucial when firms from these countries, and particularly SMEs, wish to join GVCs.

In Latin America and the Caribbean, the Development Bank of Latin America's (CAF) strongly support to the development of the vital physical infrastructure and the processes of integration and international competitiveness of the region, especially aimed at the areas of roads, energy and telecommunications among others. The Brazilian Development Bank (BNDES) is an example of an institution that is committed to national development but also increasingly guided by an internationalisation strategy. BNDES-exim provides Brazilian producers of goods and services with an important source of financing for trading with the rest of the world. Among its efforts, the increasing support of Brazilian companies trading in South America has been emphasised, in response to their strategy to strengthen commercial and financial ties across the continent. The Brazilian Export Financing Program (PROEX), which is managed by the Banco do Brasil , supports Brazilian exports of goods and services, especially by SMEs. The Central American Bank for Economic Integration (CABEI/BCEI) and the Foreign Trade Bank for Latin America (BLADEX) have noticeably gained high credit standing in the international community. CABEI has undertaken initiatives that promote intermediated credit to SMEs and has become the main regional provider of funding to the sector in Central America. It began with intermediated financing of microcredits and has gradually expanded its scope of action through other activities. BLADEX specialises in providing trade financing for the entire region, from Argentina to México and the Caribbean. It is a supranational bank originally established by the central banks of Latin American and Caribbean (LAC) countries to promote trade finance in the region and is also listed in the New York Stock Exchange (NYSE). The Latin American Association of Development Financing Institutions (ALIDE) has played a key role in promoting joint actions and coordinated participation of development banks and financial institutions focusing on Latin America and the Caribbean's socioeconomic progress and promotes exchange of experience with institutions from other regions.

The African Export Import Bank, whose goal is to stimulate a consistent expansion, diversification and development of African trade, has recently been awarded for its work in support of Africa's SMEs. The Nigerian Export Import Bank (NEXIM) aims to promote the diversification of the Nigerian economy and develop the external sector through the provision of services in support of non-oil exports, which includes the creative industry. NEXIM and the ExIm Bank of India have been cooperating in this field: a number of trade financing and infrastructure financing initiatives were introduced by the Export-Import Bank of India, including specific programs to support micro and SMEs. The latter has been awarded recognition from the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP) for its unique financing programme targeting the export-oriented Indian creative industry, which includes financing individual entrepreneurs, establishing infrastructure facilities for the creative industry and providing capacity building, reinforcing and promoting creative entrepreneurship .

Trade finance support is driven by the two main policy institutions in China, namely the China Development Bank (CDB) and the Ex-Im Bank of China. As an example of the type of negotiation that China is undertaking, it is possible to cite the CDB's infrastructure-related bilateral arrangements signed with selected countries linked to petroleum projects. Furthermore, the Korean Ex-Im Bank (KEXIM) has also been quite active in promoting South-South cooperation and the Türk ExImbank has partnered with the Nigerian ExImbank (NEXIM) to support activities in the non-oil Nigerian sector. ExImBank Malaysia, a government-owned development financial institution , provides a diverse range of products and services to Malaysian exporters; and the Philippines Export Credit Agency (Philguarantee), provides export loans and guarantees.
Constructing a new global financial architecture (suggested sub-heading)
As part of their long-term view to promote stable economic growth and help local firms to obtain cheap funding, cooperation initiatives among DFIs and ExImbanks have included the extension of lines of credits, exchange of staff, promotion of joint projects, among others. The Global Network of DFIs and ExImbanks (G-NEXID), composed of 24-members, aims to promote global trade and investment flows, especially between developing countries, within the framework of South-South cooperation. The Network was established in 2006 at the hands of the Secretary General of UNCTAD and is currently chaired by BLADEX.

More information on the role of development banks is included in the discussion paper DP152, Trade Finance Opportunities through South-South Cooperation, which can be found at www.ecdpm.org/dp152. The paper shows the need to strengthen national and regional institutions and financing trade of goods and services including through GVCs. It also praises the importance of coordinating activities and coming up with common policies to improve the conditions for and availability of trade financing. Some examples of cooperation initiatives such as G-NEXID, the Berne Union, the Prague Union, the International Development Finance Club (IDFC), the Amman Union, the Asian ExIm Banks Forum, ADFIAP, ALIDE and the proposed Brazil Russia India China South Africa (BRICS). Development Bank illustrate effective cooperation between institutions that adhere to different ideologies, face different levels of development and/or are geographically distant.

Setting up national development banks and/or ExImbanks requires a significant effort as well as bold decision making by governments, including the status of the institution, the most appropriate models of export credit, insurance and guarantee institutions that should be used as a reference, and the services that could be provided.

Nevertheless, given the rapid changes in the conditions and requirements of trade in today´s world, the dominance of open account terms of trade, accounting for more than 80% of the trade transactions, and the need for speed and efficiency, ExImbanks and DFIs traditionally specialised in mid to long term financing products, have an urgent task to adapt by reducing the lengthy processes and cumbersome paperwork, as well as increasing the range of short term financing, structures and risk mitigation products.

South-South cooperation is at the forefront of the debate on international economic development. Accordingly, the ways in which trade financing supports trade in goods and services and cooperation should be a major topic of debate and analysis in exploring joint work programs between development banks and ExImbanks. The existing partnership between UNCTAD and G-NEXID provides a useful means to facilitate such cooperation.

The impact of trade finance programmes in every stage of the production process, and particularly in the process of integrating national, regional and global value chains, deserves particular emphasis and involves different economic actors. Strengthening trade finance institutions should therefore be part of any post-financial crisis reform.
Ana María Alvarez is an Economic Affairs Officer atUNCTAD. The opinions expressed in this paper are those of the author and do not necessarily reflect the views of UNCTAD nor those of other experts or institutions that are mentioned therein.
This article was published in GREAT Insights Volume 2, Issue 8 (November 2013).

Economic recovery and transformation Trade

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Trade-Financing Facilities: Role in the Current Global Context? -ECDPM

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There have been several efforts from the international community to counteract the effects of the global financial crisis; firms operating in developing countries, which rely heavily on trade finance to support exports and imports, still face the lack of finance necessary to cover their financing needs.

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Ukraine conflict: What is Swift and why is banning Russia so significant?

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Ukraine conflict: What is Swift and why is banning Russia so significant?

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https://www.bbc.com/news/business-60521822

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By Russell Hotten
BBC News

The European Commission has proposed excluding three more Russian banks from Swift, an international payment system used by thousands of financial institutions.

It comes after the EU and its allies suspended seven institutions from the system in March.

The move aims to hit the country's banking network and its access to funds via Swift, which is pivotal for the smooth transaction of money worldwide.

What is Swift?

Swift is the global financial artery that allows the smooth and rapid transfer of money across borders. It stands for Society for Worldwide Interbank Financial Telecommunication.

Created in 1973 and based in Belgium, Swift links 11,000 banks and institutions in more than 200 countries.

But Swift is not your traditional High Street bank. It is a sort of instant messaging system that informs users when payments have been sent and arrived.

It sends more than 40 million messages a day, as trillions of dollars change hands between companies and governments.

More than 1% of those messages were thought to involve Russian payments.

How will banning Russia from Swift affect it?

In March, seven Russian banks were removed from Swift including Bank Otkritie, Novikombank, Promsvyazbank, Bank Rossiya, Sovcombank, Vnesheconombank (VEB) and VTB Bank.

The European Commission now wants to exclude a further three including the country's biggest lender, Sberbank, which accounts for more than a third of Russia's banking sector.

The package still has to be approved by EU ambassadors and is set to be signed off in the next few days.

The EU, US, UK and others have said that cutting banks out of Swift will ensure they "are disconnected from the international financial system and harm their ability to operate globally".

The aim is for Russian companies to lose access to the normal smooth and instant transactions provided by Swift, disrupting payments for its valuable energy and agricultural exports.

Banks now have to deal directly with one another, adding delays and extra costs, and ultimately cutting off revenues for the Russian government.

Russia was threatened with a Swift expulsion before - in 2014 when it annexed Crimea. Russia said the move would be tantamount to a declaration of war.

Western allies did not go ahead, but the threat did prompt Russia to develop its own, very fledgling, cross-border transfer system called the System for Transfer of Financial Messages (SPFS) as an alternative to Swift.

Few foreign countries currently use SPFS, but India is reportedly considering a Russian proposal to use it for payments in roubles.

Separately, Moscow is working with Beijing to connect to China's Cross-Border Interbank Payment System (CIPS) - another alternative to Swift which processes payments in Chinese yuan.

Why was the West divided over Swift?

Some nations - such as Germany, France and Italy - were initially reluctant to take action against Russia's use of Swift.

There were concerns that companies owed money by Russia would have to find alternative ways to get paid.

There were also fears it could impact the global banking system, although there is no evidence of this yet.

Alexei Kudrin, Russia's former finance minister, has suggested being cut off from Swift could shrink Russia's economy by 5%.

However, there are doubts about the lasting impact on Russia's economy, particularly if banks find sustainable ways to reroute payments via countries that have not imposed sanctions.

Who owns and controls Swift?

Swift was created by American and European banks, which did not want a single institution developing their own system and having a monopoly.

The network is now jointly-owned by more than 2,000 banks and financial institutions.

It is overseen by the National Bank of Belgium, in partnership with major central banks around the world - including the US Federal Reserve and the Bank of England.

Swift helps make secure international trade possible for its members, and is not supposed to take sides in disputes.

However, Iran was banned from Swift in 2012, as part of sanctions over its nuclear programme. It lost almost half of its oil export revenues and 30% of foreign trade.

Swift says it has no influence over sanctions and any decision to impose them rests with governments.

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Ukraine conflict: What is Swift and why is banning Russia so significant?

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By Russell Hotten BBC News The European Commission has proposed excluding three more Russian banks from Swift, an international payment system used by thousands of financial institutions. It comes after the EU and its allies suspended seven institutions from the system in March.

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Enter this game and play as yourself. You are allowed to redo the game again until you are satisfied. Once finish you may upload your score by screenshot your final points and the name you use and put the picture at your E Portfolio in Padlet. You may start anytime until the class date on 3 July. Have fun! Game PIN: 003624297

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Enter this game and play as yourself. You are allowed to redo the game again until you are satisfied. Once finish you may upload your score by screenshot your final points and the name you use and put the picture at your E Portfolio in Padlet. You may start anytime until the class date on 3 July. Have fun! Game PIN: 003624297

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Join a game of kahoot here. Kahoot! is a free game-based learning platform that makes it fun to learn – any subject, in any language, on any device, for all ages!

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The Kahoot activity will be conducted on 3 July 2022. We will have an individual Kahoot challenge game during our classtime.

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The Kahoot activity will be conducted on 3 July 2022. We will have an individual Kahoot challenge game during our classtime.

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Please study for your Kahoot challenge game. It will be interesting. Required reading: Chapter 4 & Chapter 10 from the Handbook of Banking Technology.

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This is not compulsory activity but it will replace your class time for online session on 29 June. Please leave comment if you are unable to attend for any reas

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(277686), i am interesting in lending department because there are many type of lending to individual and business . I want to know which detail of the lending process and the requirement. The risk for this department will face by them is credit risk . This is due to some of the borrower fail to fulfill the contractual obligations.

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(Update: Our Next Class on 29 June will be replaced with Class day engagement at DKG 3/1 from 11.30am to 1pm / The Kahoot activity will be done next week class on 3 July) Next class we will have an individual Kahoot challenge game during our classtime.

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(Update: Our Next Class on 29 June will be replaced with Class day engagement at DKG 3/1 from 11.30am to 1pm / The Kahoot activity will be done next week class on 3 July) Next class we will have an individual Kahoot challenge game during our classtime.

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Please study for your Kahoot challenge game. It will be interesting. Required reading: Chapter 4 & Chapter 10 from the Handbook of Banking Technology.

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Instructions

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Survey on Classroom Interaction: A Study on Students' and Lecturers' Contribution to Students' Silence

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Survey on Classroom Interaction: A Study on Students' and Lecturers' Contribution to Students' Silence

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Classroom Interaction: A Study on Students’ and Lecturers’ Contribution to Students’ Silence

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This questionnaire was developed by Polly A. Fassinger (1995) in the study entitled “Understanding Classroom Interaction: Students’ and Professors’ Contributions to Students’ Silence”. Full paper is available at https://www.jstor.org/stable/2943952?seq=5 . and by Abdul Latip et. all (2020 “Students’…

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Answer these questions from the video you have seen by putting in the comment section (leave your matric number too). Which Banking Department mentioned by the presenter is more interesting for you to know? Why that department is interesting for you? What risk do you think that department would face in their operations?

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Answer these questions from the video you have seen by putting in the comment section (leave your matric number too). Which Banking Department mentioned by the presenter is more interesting for you to know? Why that department is interesting for you? What risk do you think that department would face in their operations?

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Symbiosis School of Banking and Finance (SSBF) - Pune

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BWBB3013 COMMERCIAL BANK OPERATIONS MID TERM

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https://www.publicislamicbank.com.my/Business-Banking/Financing/Financing-for-Working-Capital/Trade-Finance-i

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AB-i (Purchase)
Under theMurabahah (cost plus or mark up sales) concept, AB-i is a facility granted to the importer to finance the purchase of trading goods (confined to halal and Shariah compliant only) which include raw materials.

AB-i (Sales)
The AB-i (Sales), which is underBai' Al Dayn (sale of debt) is a facility where the expoter is able to obtain immediate funds from the Bank while pending funds from the importer.

Product Disclosure Sheet:

English Bahasa Malaysia

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AB-i (Purchase) Under theMurabahah (cost plus or mark up sales) concept, AB-i is a facility granted to the importer to finance the purchase of trading goods (confined to halal and Shariah compliant only) which include raw materials.

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Trade Finance facilitates import and export activities and international trade transactions. It allows corporates and S.M.E. to access a wide range of financial products. Small and medium sized companies use trade finance products to access working capital. Hence, obtaining liquidity to make investments, pay suppliers or pay salaries.

Why do companies need trade finance?

It is a standard practice on domestic and international trade to sell on payment terms. Thus, allowing the buyer (the debtor) to delay the payment of the invoice. Hence, generating revenues before settling the supplying invoice. Having access to trade finance helps to mitigate cash flow imbalances.

For example, the shipping of goods can take several weeks before reaching the purchaser's warehouse. Thus, this represents a perfect opportunity to ask for a delay in payments. Imagine if you order a few containers of shoes from China delivery to Europe. The cargo would take circa 45 days to be delivered.

If you could agree with your supplier to pay on the 60th day, wouldn't this be helping your cash flow? The answer is undoubtedly "YES".

Likewise, in a well-established business relationship, the buyer could ask for longer instalments.

Generally speaking, for large suppliers waiting does not represent an issue. They get liquidity from different sources and have streamlined cash-flow. However, no matter how large the business is, most companies engaged in international trade, try to access trade finance solutions.

On the contrary, smaller suppliers struggle to withstand the payment terms. Their cash lifecycle is short. The money gets in and out quickly. Thus, being able to access credit terms would help to stabilise the cash flow.

In recent years, more and more small sized companies are able to access trade finance. The reasonably new ecosystem of FinTech companies such as Velotrade have made trade finance accessible to small and medium size companies.

Trade Finance Solutions and Products

Trade finance products make it safer for both importers and exporters to make international transactions. The financial i issues those products to facilitate global trade and commerce.

E-Commerce Finance

eCommerce Financing is the latest to make it on the Trade Finance Products list.

Following the increased demand for marketplaces like Lazada, eBay and Amazon, alternative financiers created the e-commerce finance solution. Likewise, Chinese's Alibaba, J.D. and Taobao have seen an increase in users shopping thru their eCommerce platform.

Through E-Commerce finance, e-commerce shops can access funds within few clicks. The applicant is the eShop owner that sells through the e-commerce marketplace. Generally speaking, the financing company issues (and renews) revolving loans. The allowance is calculated on the estimated revenues of the supplier. Once the supplier pays back the initial investment, new credit is issued.

In conclusion, technology and digitisation played a vital role in the growth of eCommerce finance. A completely new ecosystem has born to support the full development of online e-commerce activities.

Purchase Order Financing

PO Financing is part of the Trade Finance pre-shipment solutions.

The financial institution usually advances a certain percentage (between 30% to 70%) of the Purchase Order notional amount. The advanced funds are used to pay the supplier directly.
Small and Medium sized company can access working capital using the Purchase Order.

Supply Chain Finance

Supply Chain Financing (S.C.F.) is probably the most popular source of funding in international commerce. It adds efficiency for the Import & Export activities of the parties involved.
Most importantly, supply chain finance helps unlock funds tied in the supply chain tiers. The tiers include: forwarding, intermediaries and other parties involved.

Invoice discounting

​Through invoice discounting, the seller transfers the ownership of the invoice to the financing company. Thus, the debtor owns to the financing company instead of the seller.

Discount finance is becoming more affirmed as a way to access funds for businesses. Invoice discounting is already very popular in the U.K. and the U.S.A. where big banks like Barclays, Citi Bank and Chase have invoice discounting solutions.

However, in recent years, numerous small Asian sellers are using invoice discounting as an alternative source of funding. Nowadays, not only banks like HSBC, O.C.B.C., Hang Seng, N.A.B, offer to discount invoice service. In fact, many invoice discounting facilities are helping businesses to grow in Asia.

The financing process and invoice discounting meaning are well explained in this example. On the manual, you will also find the discounting costs and the advantages and disadvantages of using the service.

Receivables Financing

Accounts receivable are claims for payments. Those legally enforceable documents (the invoices) are held by a business who sold goods. However, the client (the debtor) has received the goods but has not paid yet.

From an accounting point of view we have two categories and the difference depends according to whom is due to pay:

Account payable: the company (buyer) owes to the supplier.

Account receivable: is the money that is owed to the corporate.

How to unlock working capital from account receivables? Consult this step-by-step guide and find out more!

Letter of Credit

The letter of credit is a document issued by a bank. Letter of credit is a well-known, widely used trade finance instrument. It adds protection to international trading activities.

There are several letters of credit available, depending on if for personal purposes or business requirements.

The Trade Finance Mechanism and The Players Involved

In economic terms where demand and supply for goods or services exists, then there is a market. According to Investopedia: "A market is a place where two parties can gather to facilitate the exchange of goods and services." Through the law of demand and supply, the price is discovered.

The same concept applies to Trade Finance. The buyer and the seller get together in the marketplace to match their expectations. One is looking for funds to finance its business operations. The other has excessive liquidity that would like to invest in return of a yield.

Financial institutions

Financial institutions are companies specialised in dealing with financial products. Those products include investments, loans, deposits and more. In trade finance, financial operators advance funds to corporates in need of financing. To do so, they must hold the required licenses to operate.

While specific requirements depend on the jurisdiction, others are globally required. For example, money lending and anti-money laundering licenses enable institutions to handle money. Every money lender engaged in trade finance activities, must have the necessary licenses to operate.

Moreover, if dealing with securities in Hong Kong, the S.F.C. Type 1 license is also required. The Securities and Futures Commission is the regulatory body that gives the Type 1 licence. Find out more about what implies to be an S.F.C. regulated entity in Hong Kong.

Likewise, the Hong Kong Monetary Authority trade finance department regulates the trade finance activity of banks. The primary role of the H.K.M.A. is to ensure the stability of the Hong Kong currency and banking system.

Velotrade holds all the necessary licenses to provide trade finance solutions to the Asia market. Velotrade is a digital trade finance platform with headquarter in Hong Kong.

Generally speaking, the trade finance operation department performs due diligence on all the parties involved. The trade finance assistants and trade finance officers are responsible for the onboarding. The onboarding process must be conducted to on-board new entities and allow them to use the platform. By doing so, the funding company makes sure the parties satisfy the legal requirements.

In trade finance, lending corporates can provide funds in two ways:

They grant funds directly using their capital. Hence, loading the balance sheet with debts and liabilities. Generally speaking banks and other traditional institutions do so. For example, HSBC global trade and receivable finance department or Standard Chartered Hong Kong trade finance unit.

Financing companies use investor's money to provide funds. Hence, acting as intermediaries. Thus, sourcing a pool of investors with different risk appetite, to make sure the financing needs are always satisfied. FinTech trade finance companies are exploring opportunities in this area.

The debtor A.K.A. the buyer

The buyer is the entity purchasing goods from the supplier. Thus, by definition, he is the debtor owing to the supplier. Hence, he is legally obliged to pay the debt to the counterpart. The counterparty is called the creditor.

In trade finance the debtor is responsible for paying back the funds to the lending company.

The Seller

The seller, or the supplier, is the company producing goods. It can be a manufacturing company or factory who exchanges goods in return for money. Most of the times, the seller is engaged in international trade activities selling his products abroad.

The seller owns rights on the invoice payments, and the debtor will repay him at due time. In trade finance, the seller is the pillar of the origination stage. Origination is where the invoices, the receivables and the other credit rights are "originated."

Investors

Investors are companies or entities with excess liquidity. They can be hedge funds, high net-worth individuals or indeed banks looking for alternative sources of yield. Although they could already be trading traditional assets like FX, Bonds or Equity, they may not be involved in trade finance yet. In fact, in recent years, more and more trade finance funds are being created.

How can investors invest in trade finance assets?

Trade finance asset investors enhance returns with short-dated and low correlation assets. For example, a family office intends to strike a deal on a real estate transaction. They know there is a period of six months to one year before the completion of the project. Hence, they are comfortable with tying funds in long-term investments.

What can Investors do alternatively?

Asset investors could use trade finance instruments with expiry at 30/60/90 days instead. By rolling the position a few times, they would pick-up a better yield than if the funds were sitting in the current account.

Financial intermediaries

There are many agents (brokers) and parties (debtors/buyers and sellers) involved in trade finance. Their role is to work with financial corporates. Through helping the parties to communicate and negotiate brokers earn commissions. The commission (brokerage fee) can be either a percentage on the notional or a fixed rate.

These are the most popular category of brokers seen in global trade and receivables finance.

Insurance brokers help clients to find insurance providers. Also, they assist the underwriting of the contract between the parties. For example, expensive microchips need insurance coverage for unforeseen events during transportation. Thus, the buyer and the seller would like to underwrite insurance.

Introducers for corporates connect Small and Medium-sized corporates with financing institutions. Agents help companies (factories and manufacturers) to access funding options. Thus, their strength relies on their networking abilities.

Introducers for investors are part of alternative investment solutions. Their role is to connect clients with excess liquidity to financial institutes. They do not have the licenses and capabilities to operate as lending agents. Thus, they rely on their broad portfolio of wealthy individuals, hedge funds and family offices to generate revenues.

Shipbrokers and freight brokers play an essential role in the early tiers of the supply chain. They move raw materials and goods across continents. Hence, facilitating international commerce and import & export trade finance activities. For example, commodity traders (iron ore, coal, soybeans, sugar) work with shipbrokers to find cargos for their load. Likewise, containership brokers match containers (goods) with vessels (forwarders) to deliver goods globally.

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Trade Finance Explained: Participants, Product Types & Process Flow

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Trade Finance facilitates import and export activities and international trade transactions. It allows corporates and S.M.E. to access a wide range of financial products. Small and medium sized companies use trade finance products to access working capital. Hence, obtaining liquidity to make investments, pay suppliers or pay salaries.

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Dubai: It's a small-business owner's nightmare when your company lands a major merchandise order but runs short of funds to pay for manufacturing and delivery.

If you fail to furnish the required funds quick enough, your company stands to lose the order and possibly a valued relationship with the client too.

Many small business owners stuck in this situation are turning to lenders who offer to finance their purchase order. This where ‘Purchase Order Finance’ or ‘PO Finance’ helps.

‘Purchase Order Financing’, also commonly referred to as trade or invoice financing, has become more popular this past decade.

In such finance deals, the lender evaluates the credit rating of your customer, not your company. If the customer has a track record as a reliable, prompt payer, the lender may be willing to finance your transaction.

A step by step guide to how a purchase-order finance deal works:

• Your business receives a large order from an established, creditworthy customer. This is in your company is a product re-seller or distributor, not a direct manufacturer.

• Your lender checks your customer's credit history and approves the deal. The lender then sets up a letter of credit or bank draft to pay the manufacturer of your goods. This usually takes a week or two.

• Besides forwarding payment to the manufacturer, the lender also pays the costs of shipping the merchandise. Your firm may be asked to pay inspection, insurance or shipping-duty costs incurred.

• The goods are shipped directly to your customer or to a bonded, third-party warehouse, never to your business. Once the customer takes delivery of the merchandise, your company invoices the customer.

• If the customer pays immediately, the lender collects the money, takes its cut, and gives your company the remaining profits from the sale.

• If the customer pays on terms, the lender may buy the invoice from you at a discount off the full invoice amount and pay your company the remaining profit immediately.

• The lender then waits to collect the full amount from the customer and keeps the difference as its profit. This process of buying invoices at a discount is also known as factor lending.

It's a small-business owner's nightmare when your company lands a major merchandise order but runs short of funds to pay for manufacturing and delivery.

How much does such financing cost?

Fees for factoring your invoice are usually modest. ‘Purchase order’ finance costs will be much higher, as the risk the lender is taking on is much greater.

In a factor loan, the goods have already been delivered and the customer invoiced. The deal's essentially done, so there's less risk in simply waiting to collect on the invoice. In such a finance, the lender is advancing money based only on a written commitment for a purchase.

If the customer refuses the shipment, is otherwise dissatisfied, goes broke during the transaction or for any other reason doesn't pay up, the lender loses their money. There are many more snags that can arise in such a lending deal, so costs are higher.

Though in most cases you don't need a great credit rating to get a purchase order finance loan, there are some other criteria used by most lenders in this sector.

For instance, some lenders offer limited loans to small businesses, and many will likely lend on the strength of a major purchase order or confirmed government contract.

Perks and risks to taking on alternative financing

One advantage of seeking purchase order or trade financing from a lender is that it will likely cost less than it would using an alternative, for-profit lender.

Most institutions charge market rates for their loans, so your cost will be similar to what it would have been if you'd been able to get a traditional bank loan.

Where a lender will get involved in your deal and pay your supplier directly, other alternative financiers won't take on that role. Instead, you'll get a straight loan and repay it by making monthly payments.

You'll use the loan money to pay your manufacturer and all shipping costs, and be responsible for invoicing and collecting the customer's payment.

Although getting such financing isn't ideal, as the costs will eat into your profits, if it's a choice between purchase order or trade financing and losing a big sale, it can keep your business growing.

A short-term loan is an instalment loan, meaning you borrow money from a lender and then pay back the money over three to 18 months, in weekly or daily instalments.

Is this better than a short-term loan or a business credit card?

Short-term loans and purchase order finance have a lot of similarities. They both can cover temporary gaps in cash flow, the cost is similar, and both are relatively easy to qualify for. However, short-term loans and purchase order financing are structured very differently.

A short-term loan is an instalment loan, meaning you borrow money from a lender and then pay back the money over three to 18 months, in weekly or daily instalments.

The lender gives you the funds directly and you can then use them to pay for whatever business expenses you need to cover: working capital, paying staff, paying for marketing, or for other business activities.

If the primary reason you’re using purchase order financing is to cover temporary gaps in cash flow, consider using a business credit card instead. You can use a business credit card to borrow small amounts of money when you can’t afford to buy supplies for an order.

And then you can pay off the amount you borrowed when your customer pays for the goods. Business credit cards are often a relatively affordable type of financing.

The average interest rate on a business credit card is around 14 per cent, compared to the minimum 20 per cent rate range on purchase order financing. The drawback to business credit cards is that your credit limit might not be high enough to purchase supplies for several orders (or even for a large order).

Bottom line?

Purchase order financing is an alternative way to access working capital, especially for small business owners, giving them access to funds that can help pay the suppliers before invoicing the buyers. This is because cash flow problems are most common for small business owners.

For example, a borrowing company receives a significant order from a buyer. At this time, the borrowing company does not have enough liquidity to pay the supplier upfront. So, the borrowing company uses such avenues to access liquidity by applying for funding to a financial institution.

The actual rate for purchase order financing depends on many factors. For example, the size of the purchasing order and the agreed time of repayment. Other factors are the business relationship between the parties and their financial stability.

However, purchase order financing may not be the solution to every company. For example, low-margin businesses may need to access other funding alternatives. This is because high fees can eat into your profit margins. Moreover, purchase order loans may not very flexible when it comes to your needs.

In most cases, the perks outweigh the downsides as it enables you to buy inventory and grow sales when capital is limited and helps your firm grow without increased bank debt or diluting ownership. This in turn also increases sales opportunities and facilitates cash flow for timely deliveries to customers.

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Entrepreneurs: Is trade financing better than a business loan or a credit card?

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Cash-strapped small business owners turn to lenders who offer to finance purchase orders.

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Trade-Financing Facilities: A Counter-Cyclical Role in the Current Global Context?

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Alvarez, A.M. 2013. Trade-financing facilities: A counter-cyclical role in the current global context?. GREAT Insights, Volume 2, Issue 8. November 2013. Maastricht: ECDPM.
There have been several efforts from the international community to counteract the effects of the global financial crisis; firms operating in developing countries, which rely heavily on trade finance to support exports and imports, still face the lack of finance necessary to cover their financing needs. This situation hinders them to maintain their production and trade activities. The trade finance formula
How does trade finance support production of goods and services from developing countries? Trade finance refers to methods and instruments designed to support importers and exporters through the trade cycle. Exporters extend credit to importers until they pay, and at the same time, they need to finance their own import and purchase of raw materials and production to support their export sales. The transaction encompasses a circuit where firms extend credit and secure financing to customers and simultaneously receive credit from their suppliers. On both sides the transaction involves the risk of non-payment and therefore, can generate shocks.

Trade financing involves a wide array of instruments, structures and mechanisms, depending on the parties to the transaction, the sector, country of destination, term and conditions of the contracts, etc. Generally, the most important issues behind trade financing are financing the cash-to-cash cycle of the exporter and importer, as mentioned above, and risk mitigation needs related to the importer and/or the importer´s country (country risk and commercial risk). The general premise is that exporters want to accelerate their cash-to-cash cycle, thus seeking shorter tenors as well as lower as much as possible the risk profile of a trade transaction, and importers need to extend the payment tenors.
A bipolar world of access to trade financing
Large corporations, retailers and traders, at the helm of the global supply chains (GVCs), have succeeded in building a strong network of banks over the years and therefore have excellent access to a wide variety of financing structures and channels, which protect them even in times of crisis. Unfortunately the majority of the small and medium size enterprises (SMEs), mostly in the least developed countries (LDCs), are in the opposite situation. Besides being weaker financially wise and in higher risk countries, they lack the necessary formation and information of available trade financing products. To make it worse, the potential volumes are small as compared to the first group, therefore lacking the necessary leverage to insure access to banks and trade financing lines with interesting tenors and products. Hence the GVCs and related financing are dominated by large corporations and their network of banks with very little inclusion of SMEs which, when included, are obliged to accept difficult trading conditions with long repayment tenors when exporting or short payment terms when importing, all of this under very limited financing access.
Accessing international value chains through trade financing
The intermediation of financial institutions is therefore needed because of the opposite necessities on both sides of a trade transaction. Trade financing structures and products allow the parties in a transaction to maximise their working capital cycles, and also mitigate the risks involved in a transaction, shifting the risk away from the trading partners to a financial institution. To achieve that purpose there is a diversity of financial agents, from private and government owned banks, ExImbanks and DFIs, to trade financing funds, among others.
The role of government owned and multilateral trade financing agents
A number of multilateral development banks have played a key role in ensuring trade financing flows in the post-financial crisis period. This has been translated into an expansion of trade-finance facilitation programmes by these institutions. In this regard, the G-20 Summit's Initiative (2009) was useful to mobilise additional short-term finance and guarantees to support trade. The role played by the Trade Finance Facilitation Programs of institutions such as the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter American Bank, the Islamic Development Bank, and the World Bank, have been widely recognised. These institutions have been supporting the Aid for Trade (AfT) Initiative launched in Hong Kong in 2005.

There are also a number of development finance institutions (DFIs) and ExImbanks from developing countries and emerging economies focusing on supporting trade in goods and services, including through GVCs; increasing the internationalisation of SMEs and its integration into GVCs, and developing infrastructure projects (energy, transports, communications), among other domains. Given that their membership is composed almost exclusively by developing countries and emerging economies, DFIs and ExImbanks can assess better the needs and priorities at country and regional level, and this may also give a signal to enhance the institutions, including an increase in resource allocation. Some of these institutions also follow solidarity and regional integration as a guiding principle for their cooperation initiative, and embrace socially inclusive goals. This is, for example, the goal of the proposed Bank of the South and the Bank of the Bolivarian Alliance for the Peoples of Our Americas ( Spanish : Alianza Bolivariana para los Pueblos de Nuestra América, or ALBA).

Support from DFIs and ExImbanks to trade in goods and services of developing countries, particularly LDCs, and emerging economies is required in every phase of the production process; this becomes crucial when firms from these countries, and particularly SMEs, wish to join GVCs.

In Latin America and the Caribbean, the Development Bank of Latin America's (CAF) strongly support to the development of the vital physical infrastructure and the processes of integration and international competitiveness of the region, especially aimed at the areas of roads, energy and telecommunications among others. The Brazilian Development Bank (BNDES) is an example of an institution that is committed to national development but also increasingly guided by an internationalisation strategy. BNDES-exim provides Brazilian producers of goods and services with an important source of financing for trading with the rest of the world. Among its efforts, the increasing support of Brazilian companies trading in South America has been emphasised, in response to their strategy to strengthen commercial and financial ties across the continent. The Brazilian Export Financing Program (PROEX), which is managed by the Banco do Brasil , supports Brazilian exports of goods and services, especially by SMEs. The Central American Bank for Economic Integration (CABEI/BCEI) and the Foreign Trade Bank for Latin America (BLADEX) have noticeably gained high credit standing in the international community. CABEI has undertaken initiatives that promote intermediated credit to SMEs and has become the main regional provider of funding to the sector in Central America. It began with intermediated financing of microcredits and has gradually expanded its scope of action through other activities. BLADEX specialises in providing trade financing for the entire region, from Argentina to México and the Caribbean. It is a supranational bank originally established by the central banks of Latin American and Caribbean (LAC) countries to promote trade finance in the region and is also listed in the New York Stock Exchange (NYSE). The Latin American Association of Development Financing Institutions (ALIDE) has played a key role in promoting joint actions and coordinated participation of development banks and financial institutions focusing on Latin America and the Caribbean's socioeconomic progress and promotes exchange of experience with institutions from other regions.

The African Export Import Bank, whose goal is to stimulate a consistent expansion, diversification and development of African trade, has recently been awarded for its work in support of Africa's SMEs. The Nigerian Export Import Bank (NEXIM) aims to promote the diversification of the Nigerian economy and develop the external sector through the provision of services in support of non-oil exports, which includes the creative industry. NEXIM and the ExIm Bank of India have been cooperating in this field: a number of trade financing and infrastructure financing initiatives were introduced by the Export-Import Bank of India, including specific programs to support micro and SMEs. The latter has been awarded recognition from the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP) for its unique financing programme targeting the export-oriented Indian creative industry, which includes financing individual entrepreneurs, establishing infrastructure facilities for the creative industry and providing capacity building, reinforcing and promoting creative entrepreneurship .

Trade finance support is driven by the two main policy institutions in China, namely the China Development Bank (CDB) and the Ex-Im Bank of China. As an example of the type of negotiation that China is undertaking, it is possible to cite the CDB's infrastructure-related bilateral arrangements signed with selected countries linked to petroleum projects. Furthermore, the Korean Ex-Im Bank (KEXIM) has also been quite active in promoting South-South cooperation and the Türk ExImbank has partnered with the Nigerian ExImbank (NEXIM) to support activities in the non-oil Nigerian sector. ExImBank Malaysia, a government-owned development financial institution , provides a diverse range of products and services to Malaysian exporters; and the Philippines Export Credit Agency (Philguarantee), provides export loans and guarantees.
Constructing a new global financial architecture (suggested sub-heading)
As part of their long-term view to promote stable economic growth and help local firms to obtain cheap funding, cooperation initiatives among DFIs and ExImbanks have included the extension of lines of credits, exchange of staff, promotion of joint projects, among others. The Global Network of DFIs and ExImbanks (G-NEXID), composed of 24-members, aims to promote global trade and investment flows, especially between developing countries, within the framework of South-South cooperation. The Network was established in 2006 at the hands of the Secretary General of UNCTAD and is currently chaired by BLADEX.

More information on the role of development banks is included in the discussion paper DP152, Trade Finance Opportunities through South-South Cooperation, which can be found at www.ecdpm.org/dp152. The paper shows the need to strengthen national and regional institutions and financing trade of goods and services including through GVCs. It also praises the importance of coordinating activities and coming up with common policies to improve the conditions for and availability of trade financing. Some examples of cooperation initiatives such as G-NEXID, the Berne Union, the Prague Union, the International Development Finance Club (IDFC), the Amman Union, the Asian ExIm Banks Forum, ADFIAP, ALIDE and the proposed Brazil Russia India China South Africa (BRICS). Development Bank illustrate effective cooperation between institutions that adhere to different ideologies, face different levels of development and/or are geographically distant.

Setting up national development banks and/or ExImbanks requires a significant effort as well as bold decision making by governments, including the status of the institution, the most appropriate models of export credit, insurance and guarantee institutions that should be used as a reference, and the services that could be provided.

Nevertheless, given the rapid changes in the conditions and requirements of trade in today´s world, the dominance of open account terms of trade, accounting for more than 80% of the trade transactions, and the need for speed and efficiency, ExImbanks and DFIs traditionally specialised in mid to long term financing products, have an urgent task to adapt by reducing the lengthy processes and cumbersome paperwork, as well as increasing the range of short term financing, structures and risk mitigation products.

South-South cooperation is at the forefront of the debate on international economic development. Accordingly, the ways in which trade financing supports trade in goods and services and cooperation should be a major topic of debate and analysis in exploring joint work programs between development banks and ExImbanks. The existing partnership between UNCTAD and G-NEXID provides a useful means to facilitate such cooperation.

The impact of trade finance programmes in every stage of the production process, and particularly in the process of integrating national, regional and global value chains, deserves particular emphasis and involves different economic actors. Strengthening trade finance institutions should therefore be part of any post-financial crisis reform.
Ana María Alvarez is an Economic Affairs Officer atUNCTAD. The opinions expressed in this paper are those of the author and do not necessarily reflect the views of UNCTAD nor those of other experts or institutions that are mentioned therein.
This article was published in GREAT Insights Volume 2, Issue 8 (November 2013).

Economic recovery and transformation Trade

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Trade-Financing Facilities: Role in the Current Global Context? -ECDPM

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There have been several efforts from the international community to counteract the effects of the global financial crisis; firms operating in developing countries, which rely heavily on trade finance to support exports and imports, still face the lack of finance necessary to cover their financing needs.

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https://www.iwoca.co.uk/finance-explained/trade-finance/

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Trade finance makes it easier to move goods around the world and participate in international business. So whether you've recently set up a small business and want to import your first product, or you're looking to expand your business's export trade, it’s important to understand trade finance and how it can help.

Confusingly, sometimes the term 'trade finance' is used when discussing trade credit – a different product which lets you purchase new stock or goods without paying cash upfront to your supplier. Read our article on trade credit for more information on this.

What is trade finance?

The definition trade finance typically refers to all the different instruments and products that allow you to trade internationally. Trade finance services bridge the financial gap between the importers and exporters, adding a third party to the mix and, in doing so, reducing risk and making it easier to trade.

The phrase is an umbrella term, meaning it covers many different financial products that banks and companies use to make trade transactions feasible. It covers activities such as issuing letters of credit, as well as lending and forfaiting – all of which we’ll discuss below.

The different parties involved in trade finance include banks, trade finance companies, importers and exporters, insurers, export credit agencies.

Examples of trade finance products and services include:

A letter of credit: This is where an importer's bank makes a promise to the exporter that it will immediately make the payment once the transaction has been completed.

A bank guarantee: When a bank acts as a guarantor in case the importer or exporter fails to fulfil the terms and conditions of the contract. This means the bank would pay a sum of money to the beneficiary.

Factoring: Here, an exporter sells their invoices to a trade financer (the factor) at a discount. The factor then sells it on to the importer, who pays the full price for the product.

Forfaiting: This is when an exporter sells all of their accounts to a forfaiter at a discount in exchange for cash.

Insurance: This can be used for shipping and the delivery of goods.

Lending: Lending lines of credit can be issued by banks or other providers to help both importers and exporters.

Export credit: This can be supplied to exporters as working capital.

Is a trade finance facility right for my business?

If your business trades internationally, or is likely to in the future, then you'll need to engage with trade finance to help mitigate the risks involved. Even with a confirmed order for products, many banks won't provide loans or overdraft protection for these types of transactions, so you may need a trade loan.

Trade finance is common among businesses, with some 80 to 90 percent of world trade relying on trade finance, according to the World Trade Organisation (WTO).

Other benefits to trade finance

There are other benefits to trade finance, too. It could help improve the efficiency of your business and boost your revenue. This is because cash flow is improved by the buyer's bank guaranteeing payment, and the importer knowing the goods will be shipped. In other words, trade finance ensures fewer delays in payments and in shipments, allowing both importers and exporters to run their businesses and plan their cash flow more efficiently.

How does trade finance work?

Trade finance helps reduce the risks associated with global trade by introducing a third party to transactions to remove, or at least reduce, payment and supply risks.

International trade – despite how it might feel from the consumer perspective – is a risky business. All sorts of external factors can delay a shipment arriving on time, for example. These include factors with natural, political, regulatory, and economic roots.

Trade finance is used to protect against international trade's unique and inherent risks, such as currency fluctuations, political instability, issues of non-payment, or the creditworthiness of one of the parties involved.

Trade finance example

A small business wants to import its first private label cosmetic product from overseas. To do his it uses trade finance UK. The trade deal is made with the involvement of a bank as a third party and trade financer. The two companies use a letter of credit and a bank guarantee. The exporter doesn’t need to worry that the importer could default in payment, and the importer can be sure that all the goods ordered have been sent by the exporter, because it has been verified by the trade financier.

Quick fire facts about trade loans

Trade finance makes it easier and less risky for importers and exporters to transact business through trade.

Trade finance services introduce a third party, such as a bank, and cover a range of finance products and services, such as a letter of credit or bank guarantee.

Trade finance solutions reduce risks, such as currency fluctuations, political instability and issues of non-payment. A trade finance facility can also make your business more efficient and boost its revenue.

Trade finance products and services include issuing letters of credit, lending, forfaiting, export credit and financing, and factoring.

Estimates suggest that 80 percent of world trade relies on trade finance.

More to read about Trade finance

Letters of credit

Reverse factoring

Working capital

Trade finance

Forfaiting

Trade credit

Abby Young-Powell is an award winning writer, reporter and editor. Having worked for The Guardian for over six years, she began her freelance career writing on subjects such as tech, women’s rights, education and social justice. She has also written The Telegraph, Huffington Post, The London Evening Standard and The Independent.

Article updated on:

25 May 2022

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https://marketfinance.com/business-finance/what-is-trade-finance

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In simple terms, trade finance is when an exporter requires an importer to prepay for goods shipped.

The importer naturally wants to reduce risk by asking the exporter to document that the goods have been shipped as proof.

The importer's bank assists by providing a letter of credit to the exporter (or the exporter's bank) providing for payment upon presentation of certain documents, such as a bill of lading.

The exporter's bank may make a loan to the exporter on the basis of the export contract.

MarketFinance is one of the most effective trade finance companies, and is able to provide trade finance products for businesses that might not otherwise be able to get it elsewhere.

If you are a UK based exporter, MarketFinance can provide funding against foreign debtors which traditional providers might be reluctant to commit to.

It's quick and easy to access funds, which means you can get the cash flow you need to get on with business. With MarketFinance, you get:

Fast funding: quick funding decisions and set-up

Hassle free experience: easy to use digital interface

Help in real-time: personal customer support

Straightforward costs: no hidden fees

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What is Trade Finance | Trade Finance Explained | MarketFinance

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In simple terms, trade finance is when an exporter requires an importer to prepay for goods shipped. The importer naturally wants to reduce risk by asking the exporter to document that the goods have been shipped as proof.

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Types of Trade Finance

Trade Credit

Usually, the seller of goods or services requires payment by the buyer within 30, 60 or 90 days after the product is shipped (post-shipment). Trade credit is the easiest and cheapest arrangement for the buyer. It is based mostly on trust directly between the buyer and the seller. Insurance cover is usually taken by the seller on the buyer, due to the risk of non-payment.

Cash Advances

A cash advance is a payment of funds (unsecured) to the exporting business prior to the shipment of goods. It is often based on trust; a cash advance is usually favourable and sought by the exporters so that they can manufacture or produce goods following an order. However, it is a high-risk financing structure for the buyer, as there may be delays on sending product or non-delivery.

Once a Purchase Ord er (PO) is received from an end customer, on the strength of such PO, a financier may pay the supplier direct and receive repayment from the buyer or their end customer. This will depend on the structure of the facility, but the aim behind a PO facility is for a lender to finance all the way from a supplier, through to repayment of the trade.

Receivables Discounting

Invoices, post-dated checks or bills of exchange can be immediately sold on the market at a reduced rate, to the invoice value. Receivables are mainly commercial and financial documents, and banks, finance houses and marketplaces allow such documents to be sold at discounted prices in return for immediate payment. The discount rate, which may be relatively high and can be costly for SMEs is calculated based on the risk of default, the creditworthiness of the seller or buyer and whether the transaction is international or do mestic. Find out more about invoice discounting and invoice factoring in our guide here .

Longer-term debt (including term loans and overdraft facilities) can be more sustainable sources of funding. They are often backed by security or guarantees. Often in the world of international trade and finance, securing against assets owned by business owners in differing countries is difficult, primarily due to ownership requirements and regulations. Find out more about term loans and business loans here .

Other types of Business Finance

There are other types of trade finance which we think would be useful for SMEs to know about, which aren't strictly 'trade finance' as we define, but it's worth considering.

Equity finance includes seed funding, angel investment, crowdfunding, venture capital (VC) funding and floatation. The principles however are the same. Generally, a business owner will give a proportion of his or her shares to an investor (so that they own a share of the business) and if the company grows and shares become more valuable, they will sell their shares in the business (exit) and make a return on their initial investment. It's a rather complicated type of finance with many different types - we've summarised them and written a more extensive guide to equity finance here .

Leasing and asset-backed finance involves the borrowing of funds against assets such as machinery, vehicles and equipment. There are several finance mechanisms which allow SMEs to have access to assets which are repaid in smaller contractual, tax-deductible repayments.

Asset finance allows SMEs to purchase equipment or assets over a period of time, and this method of machinery use is favourable for tax treatment in many markets. There are different types of leasing/asset finance, including finance leases, hire purchase and operating leases. We've detailed these and written an asset finance guide which you can access here.

Access trade finance - speak to our experts

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What are the Types of Trade Finance? | Trade Finance Global 2022 Guide

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Types of Trade Finance Usually, the seller of goods or services requires payment by the buyer within 30, 60 or 90 days after the product is shipped (post-shipment). Trade credit is the easiest and cheapest arrangement for the buyer. It is based mostly on trust directly between the buyer and the seller.

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https://www.theedgemarkets.com/article/sapura-energy-secures-rm700m-financing-working-capital

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KUALA LUMPUR (Feb 26): Integrated oil and gas services and solutions provider Sapura Energy Bhd has secured a new credit facility for up to RM700 million to finance working capital requirements, in light of the gradual recovery in the energy sector.

"The facility will boost Sapura Energy group of companies' financial strength to execute existing projects and undertake future contracts globally," it said.

In a bourse filing today, Sapura Energy announced that it has signed an Islamic facilities agreement with Maybank Islamic Bhd, with a loan tenure of up to five years.

It said the financing is in addition to working capital facilities of up to US$135 million secured from CIMB Bank Bhd in November 2019. This brings the combined value of the facilities from the two major banks to RM1.2 billion.

The facilities with Maybank Islamic consist of Murabahah revolving and invoice financing facilities, while that with CIMB is a multi-option line under trade financing.

The group had announced global contract wins of RM1.85 billion earlier this month.

Sapura Energy shares closed down 0.5 sen or 3.33% at 14.5 sen today, bringing a market capitalisation of RM2.32 billion.

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Sapura Energy secures RM700m financing for working capital

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KUALA LUMPUR (Feb 26): Integrated oil and gas services and solutions provider Sapura Energy Bhd has secured a new credit facility for up to RM700 million to finance working capital requirements, in light of the gradual recovery in the energy sector.

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Trade Financing

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The export market offers excellent opportunities for Malaysian exporters. However, conducting business overseas can be complex and involve many risks. It is important for exporters to understand these risks. Understanding how to manage trade risks is key to successful exporting. As an exporter you have to find the right trade financing solution that is right for you. MATRADE is sharing some basic information on trade financing. The following trade financing/products/credit terms that are offered by local and international banks operating in Malaysia:

Please contact the banks directly to find out which financial product is most suitable for your business.

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The export market offers excellent opportunities for Malaysian exporters. However, conducting business overseas can be complex and involve many risks. It is important for exporters to understand these risks. Understanding how to manage trade risks is key to successful exporting. As an exporter you have to find the right trade financing solution that is right for you.

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https://www.ey.com/en_my/banking-capital-markets/how-corporate-banks-can-ride-the-disruptive-wave-of-global-trade

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Can banks continue to dominate global trade?

Banks can maintain their dominant role in the market through investment in five key areas:

A trade transformation strategy helps enable banks to continuously evolve to compete with new market participants. Strategic partnerships with external firms will allow banks to unlock value and remain competitive.

Digitalization of trade to achieve operational efficiencies and remove friction from paper-intensive global trade. This will require initially using OCR to convert paper into digital and then upgrading the core platforms for digital inputs from e-commerce common infrastructure.

Effective capital management which helps unlock capital and liquidity through data-led portfolio management. The centralization of portfolio data sources will enable reduced risk-weighted assets (RWAs) and improved portfolio returns, while also helping banks' trade businesses to attract incremental resources from senior management.

Next-generation compliance, such as our Trade Risk Analytics Compliance Kit (TRACK), which helps banks adhere to stringent regulatory and compliance requirements and reduce penalties, delays, audits and potential reputational damage. Automation and machine learning can enable proactive controls and more adaptable compliance efforts that will allow banks to automate regulatory and compliance checks with limited human intervention.

Data and insights: Over the medium term, we believe that data and insight will supersede balance sheets as the core differentiator for facilitators and financiers of trade. Corporates are demanding a holistic customized solution for their trade financing. Banks will need to deploy advanced analytics to gain better data driven insights into their corporate clients' businesses by integrating client's existing data across trade, cash management and FX within the bank. Data-driven insight is equally critical in helping tackle the small and medium-sized enterprise (SME) financing gap by connecting companies to both non-bank and bank sources of finance. But understanding the risks associated with these borrowers is vital for investors.

Data is potentially a huge differentiator for large global and regional banks that already have a wealth of data across departments. Those that can consolidate internal bank data with data from external parties, such as shippers and other logistics companies, customs authorities and others, will win the information advantage.

For banks to remain dominant, they must invest in a clear trade strategy to navigate current challenges while preparing for the next five years. They must ensure that strategic decisions made today will enable agility and allow them to work in unison with a shifting trade agenda and complex ecosystem of participants. This requires data sharing and collaboration across a trusted network of global trade players, combined with an understanding of evolving financial regulation and market-leading efficiency.

As they define their strategy, banks must look at new ways to retain their highest value clients - those at the top of the credit curve - and explore new ways to serve clients down the credit curve, including small and medium-sized enterprises.

The transformation of trade offers banks a valuable opportunity to transform - to reimagine how to facilitate and finance trade with no constraints and no legacy baggage. Banks should ask themselves how they would set-up their trade finance business from scratch. Are existing organizational structures still fit for purpose or could some parts of the business be housed in a different legal entity? Is it time to consider creating a new digital trade bank?

Amid the disruption of global trade, pure efficiency plays and incremental innovation are no longer enough to compete. Banks must embark on a trade transformation journey - and ultimately may have to disrupt themselves, and completely reinvent the role of a global trade bank.

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How corporate banks can ride the disruptive wave of global trade

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Can banks continue to dominate global trade? Banks can maintain their dominant role in the market through investment in five key areas: A trade transformation strategy helps enable banks to continuously evolve to compete with new market participants. Strategic partnerships with external firms will allow banks to unlock value and remain competitive.

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Commercial banks facilitate global business by enabling the reliable movement of money.

conceptual international business/customer service image by Stasys Eidiejus from Fotolia.com

Commercial banks do not create money--they are simply the intermediaries that move money from the capital markets to businesses and institutions. Banks get their money through business checking or deposit accounts, service fees and by issuing certificates of deposit (CD) and banker's acceptances--money market instruments that are collateralized by letters of credit (LOC) used in trade finance--and commercial paper. Commercial banks offer services such as trade finance, project finance, payroll, foreign exchange transactions and trading, lock boxes for collecting payments and general corporate finance.

Significance

Without commercial banks, the international finance and import-export industry would not exist. Commercial banks make possible the reliable transfer of funds and translation of business practices between different countries and different customs all over the world. The global nature of commercial banking also makes possible the distribution of valuable economic and business information among customers and the capital markets of all countries. Commercial banking also serves as a worldwide barometer of economic health and business trends.

Foreign Branch Banking

Some small commercial banks limit their reach to the local business community; but as business has gone global, so have commercial banks. Large banks such as Citigroup, Bank of America and Chase are retail (consumer) banks that also maintain full commercial banking activities in the United States with branches in many countries. These larger banks may act as affiliates of smaller banks that do not have branch presences in other countries. Through foreign branch banking, U.S. based multinational companies can consolidate their financial business at a single bank that handles their trade finance, currency transactions, project loans, payroll, cash management investments and deposit accounts throughout the world. Commercial banks also arrange deals between their customers globally, including strategic partnerships and project fulfillment agreements.

Trade Finance

Commercial banks doing international business are also called merchant banks because they finance trade between companies and customers located in different countries. This is done by issuing LOCs that indicate the customer has deposited the full amount due on an order with a company located in a different country. The seller company can then feel assured of being paid if it ships goods to its offshore customer. The LOC may also be used by the company to guarantee a manufacturer's loan, allowing it to finance the manufacture of the goods to be delivered. Without LOCs, companies would face considerable expense in investigating their foreign customers to make sure they are legitimate and creditworthy, and complying with laws and regulations of the different countries in which they do business.

Foreign Exchange

In order to facilitate international trade and development, commercial banks convert and trade foreign currencies. When a company is doing business in another country it may be paid in the currency of that country. While some of these revenues will be used to pay workers in that country and for administrative expense such as office rent, utilities and supplies, the company may need to purchase goods from a neighboring country in that country's currency, or convert cash to its native currency for return to the home office.

Corporate Finance

Companies always need to borrow money to cover purchases of raw materials, machinery parts, inventory and/or payroll. Banks with overseas branches or affiliates can simplify the process of corporate finance throughout a company's organization by consolidating the transaction procedures, reporting and record keeping. It is much easier for a company manager to do business in her own language with a banker located nearby who handles her global business finance needs than it would be for her to develop banking relationships in every country where she does business. Her international commercial bank can also provide referrals to professional service firms in other countries, as well as arrange introductions to other companies appropriate as customers or for strategic partnerships.

Miscellaneous Banking Services

Corporate checking accounts, currency specific credit cards and lock boxes are also offered by commercial banking to help make foreign trade possible for a company. Lock boxes are particularly helpful for collecting payments from overseas customers and reporting receipts daily for cash management purposes. Currency-specific credit cards are also important in eliminating the cost of cross currency purchasing, which normally is done at expensive valuation levels.

About the Author

Victoria Duff specializes in entrepreneurial subjects, drawing on her experience as an acclaimed start-up facilitator, venture catalyst and investor relations manager. Since 1995 she has written many articles for e-zines and was a regular columnist for "Digital Coast Reporter" and "Developments Magazine." She holds a Bachelor of Arts in public administration from the University of California at Berkeley.

Photo Credits

conceptual international business/customer service image by Stasys Eidiejus from Fotolia.com

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Role of Commercial Banks in International Business

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Commercial banks do not create money--they are simply the intermediaries that move money from the capital markets to businesses and institutions. Banks get their money through business checking or deposit accounts, service fees and by issuing certificates of deposit (CD) and banker's acceptances--money market ...

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Essentially, trade finance is a catch-all term for making import and export transactions in international trade.

In other words, it's when an exporter requires an importer to prepay the goods shipped.

As an owner of a business (especially SMEs), naturally, you would want to reduce risks to the greatest extent.

And you definitely do not want your cash flow to get tied up in shipments for weeks to wait for the overseas manufacturer to arrive.

Aside from SME owners, here are the other common users of trade finance:

What these types of users have usually have in common is their reliance on global shipments.

Here's when trade finance steps in and helps you reduce costs and streamline the flow of your trade logistics.

How does Trade Finance work?

To put it simply, the importer's bank will provide a Letter of Credit (LoC) to the exporter.

This is to provide payment with the presentation of certain documents, such as the Bill of Lading.

Judging by the basis of the export contract, the loan may be made by the exporter bank.

There are 2 criteria that determine what kind of documents you use:

1. Nature of the transaction;

2. How evidence of the performance can be shown (e.g. Bill of Lading to show shipment)

Now, there's one thing you should take note of: the bank will only deal with the documents.

Any concern relating to the product, services, or performance-related will not be their concern.

Want to know more about trade finance in detail?

Click here to check out our article What is trade finance and how does it work?

Why do SMEs Need Trade Finance?

No matter what size your business be: you could be a small business importing products/materials from overseas, or multinational corporations doing imports or exports of a huge stock of inventory around the globe annually.

You want your get your money in and out of the tunnel as soon as possible, and not having worried about how complications like the volatile exchange rates or cash flow problems risking your trading process.

What you want here is to have your risks handled properly and make sure your flow of transactions is smooth and free of any cash flow imbalance issues that'll possibly add up to the costs.

Types of Trade Finance Products

1. Letter of Credit

To put it simply, a letter of credit is a pledge for making payment issued by a bank on behalf of the importing client.

It's a common trade finance document that you must know about.

Essentially it is an undertaking by the bank to pay the exporter the money in a certain time period upon the negotiated terms and conditions.

It allows sellers and buyers to mitigate part of the inherent risks in international trade, including currency value fluctuation, non-payment, and economic instability.

How Letter of Credit works

Usually, when the importer (aka the buyer) wants to purchase products from an exporter (seller), the buyer will reach to the seller's bank along with a purchase order.

Depending on their level of credibility, a letter of credit would be issued by the bank.

Then, it will be followed by the exporter's bank request of LC from the buyer's issuing bank.

As soon as they receive the letter and verify the terms, the exporter will clear the bank and the goods will be ready to be shipped.

After that, the seller's bank will issue the payment to the seller.

Then, the buyer's bank will receive the forwarded shipping papers and the importer will request the payment.

Types of Letter of Credit

There are different types of letter of credit available at the moment, but it depends on whether it's for business or personal requirements.

Here are the common types of Letter of Credit (LC):

Commercial Letter of Credit: this is usually referred to as the import/export credit. A confirming bank from the exporter's side will release funds upon agreed conditions.

Standby Letter of Credit: It's designed for payment/compensation guarantee in case certain terms or conditions fail to meet.

Transferable Letter of Credit: It allows the beneficiary to transfer either part or all the payment to another supplier.

Back-to-Back Letters of Credit: it connects importer and exporter by allowing intermediaries.

Revolving Letters of Credit: It allows businesses to do multiple different transactions on solely one LC until it expires.

2. Purchase Order (PO) Finance

Purchase Order (PO) finance is designed for SMEs who face inefficacy of cash flow problems.

This is part of the pre-shipment solutions for trade finance.

Essentially, it provides capital to pay suppliers with the verified purchase order to guarantee smooth cash flow.

It enables businesses to accept a large volume of orders and adjust the loan basis to meet their needs.

It's especially true for SMEs as most of the time you receive a large volume of orders but don't have enough working capital to process it. It solves exactly that problem.

PO finance advances to a certain percentage by the financial institution, usually 30-70% of the purchase order amount.

Even if the volume of orders decreases, there are no tied arrangements, which means you can stop using it anytime you want.

How Purchase Order Finance Works

As soon as the end customer received the purchase order (PO), the supplier will be paid directly by the financier.

Then the financier can receive payments from the buyer/customer.

Usually, the customer will be paid 60-90 days after the shipment arrived.

But then there's a thing you should take note of: in between the payment and shipment period, it creates a capital gap.

The problem with that is you could risk losing the order if you have no money in between to support it.

To solve the capital problem, businesses would usually go for traditional financing. But then the problem with it is that not all bank requirements can be satisfied.

Qualifications for PO Finance

If your business is considering PO finance for more flexible cash flow, here are a few of the simple requirements you should pay attention to:

Sell to B2B & B2C customers

An order of >$20,000

Sell finished products (raw materials or product parts is not accepted)

Profit margins of 15-20%

Creditworthy customers

Reputable suppliers (manufacture & deliver products to customers on time)

3. Supply Chain Finance

Supply Chain Finance (SCF) is actually for sellers, buyers as well as financial institutions.

The main goal of it is to better the payment terms and make your cash flow more flexible in the supply chain process.

The buyer would negotiate payment terms, including an extended payment schedule.

At the same time, the seller can also get immediate payment while unloading the products quickly.

Now, we should clarify this one thing first: supply chain finance is not a loan per se.

In fact, it is a technology-based cash flow solution that lowers financial costs. It mainly does these things:

Automate transactions;

Track invoice approvals & settlement processes;

Now, the good thing about it is that it frees up some of your working capital while you wait for the shipment to arrive.

So your money wouldn't get trapped in the supply chain and make your cash flow more flexible.

How Supply Chain Finance works

Essentially how it works is that buyers will need to approve their suppliers' invoices for financing.

This can either be done by a bank or other third-party financier (aka "factors").

And it provides liquidity for both the buyer and the seller through providing short-term credit.

This can optimize the working capital and make the cash flow more flexible for both of the parties.

Benefits
If you're a supplier...

1. Instead of having to wait for the 30-day credit terms, the suppliers can be paid earlier;

2. Insurance provided to reduce financial risks;

3. Provides liquidity

If you're a buyer...

1. Enables buyers the ability to purchase in bulks to save costs;

2. Can work with complex end-to-end supplier chain;

3. Maintains a healthy balance sheet

How Can Trade Finance Benefit My Business?

To purchase goods or stocks, the first step for you is to secure the funds necessary for the growth of your business.

And the best way to do it is by using a tool that helps you manage the cash flow and working capital.

The good thing about trade finance is that it can unlock capital from your business's existing stock or receivables based on the trade cycles in your company.

The key point is to reduce your payment gaps.

It can enable you to offer more competitive terms for both your suppliers and customers to increase your competitive edge and reduce other risks such as payment, country or corporate risks included.

By reducing these payment gaps, exchange rate risks could be significantly minimized, and thus, the efficiency and flow of your trading cycle can be maximized.

Invoice discounting isn't technically a trade-financing specific activity, but some trade financing institutions are also operating with this product as well.

Want to have your international payments are taken care of and risks managed at the same time?

Open a business account with Statrys today and you'll get access to multi-currency accounting and FX trading services which can round-our your trade finance needs.

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Statrys * 3 Common Types of Trade Finance Products Explained

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Essentially, trade finance is a catch-all term for making import and export transactions in international trade. In other words, it's when an exporter requires an importer to prepay the goods shipped. As an owner of a business (especially SMEs), naturally, you would want to reduce risks to the greatest extent.

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Staff Reporter

, Singapore

Photo courtesy of Zhu Hongzhi.

UOB, DBS, OCBC, and Standard Chartered are participating in the initiative.

A consortium of four major commercial banks in Singapore and the Singapore Trade Data Exchange (SGTraDex) have collaborated to develop digital solutions for the application of clear, consistent green trade financing standards across industries.

The initiative aims to enable effective, data-driven decision-making around environmental, social, and governance (ESG) factors so that banks can better support their clients’ green trade financing needs, according to the joint announcement. The initiative is conducted in partnership with the MAS Project Greenprint1 and will start in end-November.

UOB, a member of the ’s (MAS) Green Finance Industry Taskforce, leads this industry initiative with SGTraDex. Participating banks include DBS, OCBC Bank, and Standard Chartered.

When completed, the initiative will reportedly create a transparent green trade financing data exchange model facilitated by SGTraDex infrastructure for banks to validate required green certification data residing within a centralised repository. This will allow banks to extend green trade financing to qualified supply chain players in the areas of production, trading or distribution through a more simplified process and in a timelier manner, the announcement said.

Follow the link for more news on

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Singapore banks, SGTraDex to develop standards for green trade finance digitalisation

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The initiative is conducted in partnership with the MAS Project Greenprint1 and will start in end-November.

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Abstract

In response to the challenges resulting from the COVID-19 pandemic, governments are looking to their Export Credit Agencies (ECAs) to fill any financing gaps left by the private market and to mitigate the impact of the crisis by engaging in both short-term (ST) and medium- and long-term (MLT) trade finance. In the absence of comprehensive data on trade finance, this brief uses OECD surveys and other related indicators to attempt to identify emerging trends. These indicators suggest that ST trade finance is facing access problems (increased costs of ST financing for SMEs and higher rates of rejected applications) while MLT trade finance appears to be relatively resilient (decrease of 34% in volume and 15% in number of MLT export credit transaction). ECAs may therefore have a role to play in ST trade finance by acting on liquidity and increasing capacity. However for MLT trade finance, ECAs might have fewer levers for action, especially if the pandemic is affecting the demand side and reducing the pipeline of projects.

Short-term (ST) trade finance products which enable deferred payment over a period of less than one year (usually less than 180 days) are the most common form of trade finance and are especially vulnerable during periods of uncertainty leading to increased prices and reduced overall availability (OECD, May 2020[3]) . Little data is publicly available for ST trade finance as the vast majority is provided by the private sector and comes in numerous forms (intra-firm financing, inter-firm financing, or more dedicated tools such as letters of credit, advance payment guarantees, performance bonds, and export credit insurance or guarantees).

In past crises, and more notably during the 2007-2009 Great Recession, ST trade finance declined sharply due to pressures on private institutions' liquidity, leading to elevated costs of trade finance. However, commercial banks' liquidity does not appear to be a problem in the wake of COVID-19. Indeed, "after ten years of tightening regulation, capital buffers are higher and the banking system are generally seen as safer" (Richard Baldwin, 2020[5]) . In fact, the level of the TED spread (difference between the interest rates on interbank loans and ST U.S. government debt), which is usually a broad liquidity indicator of ST trade finance, has been on average very low. Although the TED spread initially rose up to 1.46% (its highest level since the 2007-2009 crisis) at the beginning of the pandemic, it quickly dropped to its pre-pandemic levels and has remained low ever since ( Figure 1) This would suggests that, contrary to what was observed during the 2007-2009 Great Recession, the cost of ST trade liquidity has not increased and financing opportunities should be available to exporters.

Figure 1. Evolution of the TED spreads: 2001-2021 (%)

Nonetheless, exporters are facing difficulties accessing ST financing in the private market. In the United States, the Wall Street Journal (Julie Steinberg, Sep 2020[6]) reported a 60% increase in rejected applications for trade credit insurance. In addition, the International Chamber of Commerce (ICC) reports a retrenchment of banks from financial sectors deemed "high risk" as well as increases in the price of ST financing for SMEs (ICC, Nov 2020[7]) . On the other hand, government-supported Export Credit Agencies (ECAs) are seeing an increase in the demand for their short‑term products. According to an OECD survey, 43% of ECAs have reported an increase in their business levels, mostly in connection with short‑term products. The Export-Import Bank of the United States (US EXIM), one of the largest providers of ST government export support, reported a 112% increase in working capital guarantees and a 12% increase in ST export credit insurance during the 2020 fiscal year (Exim Bank, Jan 2021[8]) .The German ECA (Euler Hermes) reported that it had seen a sharp increase (by more than a third) in the number of applications for export credit guarantees for the first half of 2020 (Euler Hermes, 2020[9]) . These trends suggest that even though commercial lenders may have adequate liquidity to provide financing to exporters, their risk appetite may have diminished resulting in limited availability of trade finance for exporters and a shift towards governments acting through their ECAs.

The underlying reasons for the disruption of ST trade finance are different than those of past crises; however, the result is the same: exporters are facing barriers in accessing ST financing. Since ECAs expected a significant shortfall in the private market supply for ST financing based on their experience in the last crisis, they have been acting quickly to fill the gap by mobilising their export support programmes.

First, in order to mitigate the ST liquidity problems faced by exporters and their supply chains, ECAs have been boosting their working capital support programmes. These programmes, which take the form of an insurance or guarantee to financial institutions on behalf of exporters, provide exporters with liquidity to finance the costs incurred by the exporter to produce goods for export. According to an OECD survey1, 64% of ECAs indicated that they took measures aimed at increasing working capital support. These measures included increasing the capacity or expanding the coverage of existing working capital programmes and creating new working capital facilities.

In addition, ECAs have endeavoured to fill the gap left by the private market in ST trade finance by increasing the availability of government ST support programmes, such as export credit insurance or guarantees. To that end, many ECAs have increased the capacity of existing programmes, created new facilities and extended their limits of cover to include new risks. For example, the European Commission decided to make ST export credit insurance more widely available by temporarily removing all countries from the list of "marketable risk" countries, which are normally ineligible for public support, until the end of 2021. Increasing capacity was particularly effective for the recovery in the aftermath of the 2007‑2009 Great Recession (new risks covered in ST increased by 22% in 2010 and 13% in 2011 ‒ see Figure 2) and is likely to be crucial during the current COVID‑19 crisis, as the International Chamber of Commerce (ICC) anticipates that USD 1.9-5.0 trillion capacity in trade credit market will be required to enable a rapid recovery.

Figure 2. New risks covered by OECD countries (in USD million)

The projection in 2020 and 2021 is based on the average growth rates observed in 2010 and 2011 to show what the effects would be if ECAs' reactions have a similar impact on activity.

ECAs are also counting on simplified procedures and expedited processes to facilitate the provision of trade financing support to ensure that the gaps in private market financing are filled expeditiously. According to both OECD1 and Berne Union (Berne Union, 2020[10]) surveys, most ECAs have developed fast‑track policy approval processes, deployed contactless application processes, provided deadline extensions to policy holders, and extended time for notification and claims filling.

However, ECAs do not have free range with regards to how they develop or amend their export support programmes, especially those targeting short‑term transactions. Indeed, such programmes are bound by the World Trade Organisation's (WTO) Agreement on Subsidies and Countervailing Measures (ASCM), according to which export support programmes dependent on export performance (i.e. tied to national goods being exported) and for which the cost of the support is lower than that which is offered by the commercial market are regarded as prohibited subsidies. Therefore, in order to avoid the possibility of a WTO dispute, governments must keep these considerations in mind when amending or creating new programmes, even if they are reacting to a crisis.

Finally, regardless of constraints related to the supply of trade finance, it is also likely that the pandemic has produced a shock on demand as well as production, thereby reducing exports and leading to disruptions in the supply chain. In this scenario, ensuring that a sufficient amount of ST financing is available through export support programmes will not be sufficient to maintain trade flows. Availability of finance does not create demand.

Medium- and long-term (MLT) export financing is primarily used for the financing of capital equipment either alone or as part of large projects (e.g. infrastructure, manufacturing, oil and gas, etc.) which require longer repayment periods. This type of support consists primarily of buyer credits that allow foreign buyers to access MLT financing to purchase exporters' products and services. The public sector, including ECAs and multilateral organisations, is much more present in MLT financing than in ST financing, notably through the provision of export credits compliant with the Arrangement on Officially Supported Export Credits (the Arrangement). Although the capacity of private market MLT financing has been growing (Berne Union, 2021[11]) , private market financing options remain limited in part due to the financial regulatory framework applied to private institutions, such as Basel and Solvency risk assessment standards, which de facto limits market capacity, and also because these complex transactions are deemed riskier in terms of size, structure and location by the private sector.

Although there is no comprehensive data on MLT export financing, there is data on export credits provided by OECD countries according to the terms and conditions of the Arrangement which can provide an interesting insight with respect to the emerging trends in MLT export financing. However, the data on export credits provided in 2020 is currently incomplete due to lags in reporting, which on average extend to three months. In order to have a sense of the emerging trends as a result of the pandemic despite this lag, it is necessary to adjust the data. When looking at this adjusted data it appears that both the volume of export credits and the number of transactions have decreased in 2020, with -34% in volume and -15% in number of transactions ( Figure 3). This is in line with the numbers reported by the Berne Union [17% decrease in the amount of new MLT commitments for the first half of 2020 (Berne Union, 2020[12]) ].

The recent business reports published by some of the major ECAs seems to support the observations made from the aggregate data. Indeed, for the first half of 2020, the German ECA (Euler Hermes) reported a decline in the volume of cover due to the lower number of big-ticket projects, especially in the transportation sector which has been hit particularly hard by the pandemic (cruise ships, aircraft) (Euler Hermes, 2020[9]) . The Canadian ECA (EDC) has seen its financing and investment activity decrease by 16%, primarily due to a 30% decrease in direct lending as a result of decreases in the oil, gas and mining sector during the first three quarters of 2020.

Figure 3. Volume of officially supported export credits (USD millions) and number of transactions reported up until 31 December each year

"Core business" refers to official export credits supported according to the rules found in the body of the Arrangement or one of the following annexes: (1) nuclear power plants, (2) renewable energy, climate change mitigation and adaption, and water projects, (3) rail infrastructure, (4) coal fired electricity generation projects or, (5) project finance transactions. "ASU" business refers to aircraft supported under the terms and conditions of the Aircraft Sector Understanding.

Box 1. Support for aircraft

According to Figure 3, the amount of officially supported export credits for aircraft transactions has decreased in 2020 and so has the number of transactions supported. However, the decrease observed is mild compared with how severely the aircraft sector has been hit by the crisis. This can be explained by the fact that the support for aircraft was already very low over the past four years. The low volume of support for aircraft between 2016 and mid-2019 is largely due to the unusual constraint on the Export-Import Bank of the United States ("US-EXIM"), one of the major export credit providers for aircraft, from July 2015 until May 2019. 1 In addition, the decision made by France, Germany, and the United Kingdom in 2016 to suspend temporarily their support for Airbus transactions, also contributed to the sharp decline of aircraft supported over the last few years.

US-EXIM's charter expired without being reauthorised on 30 June 2015, this prevented US-EXIM from providing any official export credits until 4 December 2015 (when its charter was reauthorised). However, even then, due to the absence of the necessary Board quorum, US-EXIM could not support transactions with a credit value over USD 10 million until 19 May 2019, when the quorum was re-established (following the confirmation by the Senate of three members on US-EXIM's board).

However, based on the severity of the crisis triggered by COVID-19, a much stronger inflection of the curves might have been expected: a sharp decrease as a result of the shock in the supply and demand curves, followed by an important increase as exporters shift from private finance to government backed support in reaction to the contraction of private finance opportunities. Therefore, based on preliminary trends, the impact of the crisis on MLT export finance would appear relatively limited. In fact, EDC reported an increase in both project finance (1.1%) and loan guarantees (64%) through the third quarter of 2020 and US-EXIM also reported an increase in its authorisation for MLT guarantees.

As the crisis triggered by the pandemic continues, it is expected that the pressure on buyers (e.g. the demand side of the equation) will increase, especially for larger transactions (such as infrastructure projects) which had appeared relatively resilient so far. Indeed, with COVID-19, some infrastructure assets (hospitals, ports) have seen their operations redirected to support governments' response to the crisis. In addition, the crisis has led buyers' revenues to plummet, especially in certain sectors which have been hit particularly severely by the crisis (such as the transportation and tourism sectors). This is expected to weigh on exporters' long-term cash flows, as they struggle to maintain business volumes.

At this stage of the crisis, these pressures on the buyers do not seem to have led to an increase in claims and default situations. According to an OECD survey,1 75% of ECAs surveyed did not report an increase in claims. This is also supported by the Berne Union data, according to which ST and MLT claims reported by ECAs over the first half of 2020 have remained relatively constant compared to 2019 (Berne Union, 2020[12]) . However, there has been an increase in the request for payment deferrals. Indeed, the Swedish ECA (EKN) noted in their interim report for 2020 an increasing number of applications for payment deferment both in SME working capital financing and payments from the international customers of large corporates. ECAs have acted on these pressures by introducing waivers in premium and fees for restructurings and facilitating the deferral of payments when possible. Governments have also attempted to provide co-ordinated actions to alleviate the pressure on buyers' liquidity, with for example the Debt Service Suspension Initiative (DSSI), which consists of a temporary moratorium of payments by sovereign borrowers between 1 May 2020 and 30 June 2021 (including medium/long term export credits) for the poorest countries who request it.

ECAs have at their disposal a few other tools that they can mobilise should the need for further payment flexibilities in MLT transactions arise. Indeed, the Arrangement, which regulates official MLT export credits provided by OECD ECAs, has some imbedded flexibilities that can be used by ECAs. For instance, the Arrangement has a clause which allows for the use of more liberal terms and conditions in order to "preserve a credit", e.g. to minimise losses should a claim or a non-payment occur in an existing transaction. In addition, the repayment rules of the Arrangement can, under certain circumstances, allow for new transactions to defer the first repayment of the principal up to one year. However, these levers might not be sufficient in providing the flexibilities required should the crisis continue. For instance, due to shortfalls in revenues and cost increases for infrastructure projects, relevant companies might need more flexibility concerning the repayment schedules (e.g. grace period), repayment tenors, or the down payment rules which would require amending the Arrangement. Indeed, Business at OECD (BIAC), an international business network, appealed for temporary flexibility of the down payment requirements for projects in emerging and developing markets in July 2020 (Business at OECD, EBF and ICC, Jul 2020[15]) . The OECD, as the main forum to maintain, develop and monitor export credit disciplines, could facilitate these discussions and help governments reach a consensus should the need arise.

However, there is only so much that ECAs can do to their export support programmes to mitigate the pressures faced by buyers and avoid contract renegotiations and debt restructurings which become more likely as the crisis continues (World Bank Group, Jul 2020[16]) . In fact, acting on export support programmes may have very little to no impact in the near term if the pressures triggered by the pandemic on buyers' revenues and investors' risk appetite lead to the cancellation of prospective projects due to project viability. According to the Global Investment Trends Monitor, Global Foreign Direct Investment in 2020 fell by 42% and is likely to remain very weak in 2021, which is evidence that the funding demand of projects will be lower in the coming years and therefore that the pipeline of projects will be slower. If this is the case, governments will need to turn to different types of tools to stimulate demand in order to avoid a slowdown of trade and a further deterioration of the economy.

Macroeconomic indicators show that the pandemic has severely impacted the global economy and, more specifically, international trade. However, information remains limited on the level and on the type of the disruptions that have emerged, as comprehensive data on trade finance does not exist. Nonetheless, information from surveys and other related indicators allow for some emerging trends in trade finance to be identified. ST trade finance appears to be the most affected by the crisis, in part due to pressures on the access to trade finance opportunities caused by the diminished risk appetite of the private market. Governments acting through their ECAs can attempt to alleviate these barriers by providing liquidity to exporters (for example via working capital programmes, as has already been done by 64% of ECA according to an ECA survey1) and increasing the availability of export support programmes. In contrast, MLT financing appears to have been more resilient to the current crisis. The number of MLT export credit transactions are expected to decrease by 34% in volume and 15% in number in 2020, which indicates a drop in large projects but not in standard medium term business. However, this apparent resilience may not last should the pandemic continue and weigh further on cash flows of MLT projects. In order to avoid these future impacts, ECAs may need to achieve further flexibility in their MLT export support programmes by amending their terms and conditions, either through available flexibilities in the Arrangement or by revising it. The OECD can assist governments in this work. Governments may also need to look to other tools in order to fight the pressures on the demand side which are likely to affect MLT trade as much, if not more, than the supply/financing side should the crisis persist.

References

Notes

Export credit insurance/guarantees cover an exporter's foreign accounts receivable against commercial (i.e. non‑payment) and political (e.g. expropriation, political violence, sovereign debt default, war) risks.

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Trade finance in the COVID era: Current and future challenges

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In response to the challenges resulting from the COVID-19 pandemic, governments are looking to their Export Credit Agencies (ECAs) to fill any financing gaps left by the private market and to mitigate the impact of the crisis by engaging in both short-term (ST) and medium- and long-term (MLT) trade finance.

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Privacy Policy

Our privacy commitments

This Privacy Policy outlines the information we may collect about you in relation to your use of our websites, events, related publications and services ("personal data") and how we may use that personal data. It also outlines the methods by which we and our service providers may (subject to necessary consents) monitor your online behaviour to deliver customised advertisements, marketing materials and other tailored services. This Privacy Policy also tells you how you can verify the accuracy of your personal data and how you can request that we delete or update it.

This Privacy Policy applies to all websites operated by Exporta Publishing & Events Ltd (as indicated on the relevant website).

This privacy statement does not cover the activities of third parties, and you should consult those third-party sites' privacy policies for information on how your data is used by them.

Any questions regarding this Policy and our privacy practices should be sent by e-mail to privacy@gtreview.com or by writing to Data Protection Officer at, Exporta Publishing & Events Ltd, 4 Hillgate Place, London, SW12 9ER, United Kingdom. Alternatively, you can telephone our London headquarters at +44 (0) 20 8673 9666.

Who are we?

Established in 2002 and with offices in London and Singapore, Exporta Publishing & Events Ltd is the world's leading trade and trade finance media company, offering information, news, events and services for companies and individuals involved in global trade.

Our principal business activities are:

Business-to-Business financial publishing. We provide a range of products and services focused on international commodities, export, supply chain and trade finance markets including magazines, newsletters, electronic information and data

Organisers of seminars, conferences, training courses and exhibitions for the finance industry

Exporta Publishing & Events Ltd is a company registered in the United Kingdom with company number 4407327 | VAT Registration: 799 1585 59

Data Protection Policy

This Data Protection Policy explains when and why we collect personal information about people who visit our website, how we use it, the conditions under which we may disclose it to others and how we keep it secure.

Why do we collect information from you?

Our primary goal in collecting personal data from you is to give you an enjoyable customised experience whilst allowing us to provide services and features that will meet your needs.
We collect certain personal data from you, which you give to us when using our Site and/or registering or subscribing for our products and services. However, we also give you the option to access our Sites' home pages without subscribing or registering or disclosing your personal data.

We also collect certain personal data from other group companies to whom you have given information through their websites (including, by way of example, Exporta Publishing & Events Ltd and subsidiaries, in accordance with the purposes listed below). Should we discover that any such personal data has been delivered to any of the Sites, we will remove that information as soon as possible.

Why this policy exists

This Data Protection Policy ensures Exporta Publishing & Events Ltd:

Complies with data protection law and follow good practice

Protects the rights of staff, customers and partners

Is open about how it stores and processes individuals' data

pretexts itself from the risk of a data breach

We may change this Policy from time to time so please check this page occasionally to ensure that you're happy with any changes. By using our website, you're agreeing to be bound by this Policy.

Data protection law

The Data Protection Act 1998 described how organisations - including Exporta Publishing & Events Ltd - must collect, handle and store personal information. These rules apply regardless of whether data is stored electronically, on paper or on other materials. To comply with the law, personal information collected must be stored safely, not disclosed unlawfully and used fairly.

The Data Protection Act is underpinned by eight important principles. These say that personal data must:

Be processed fairly and lawfully

Be obtained only for specific, lawful purposes

Be adequate, relevant and not excessive

Be accurate and kept up to date

Not be held for any longer than necessary

Processed in accordance with the rights of data subjects

Be protected in appropriate ways

Not be transferred outside the European Economic Area (EEA), unless that country of territory also ensures an adequate level of protection

How do we collect information from you?

We obtain information about you when you use our website, for example, when you contact us about products and services, when you register for an event, register to receive eNewsletters, subscribe or register for a trial to our GTR magazine/website.

Types of Personal Data Held and its Use

1. Customer Services and Administration

On some Sites, Exporta Publishing & Events Ltd collects personal data such as your name, job title, department, company, e-mail, phone, work and/or home address, in order to register you for access to certain content, subscriptions and events. In addition, we may also store information including IP address and page analytics, including information regarding what pages are accessed, by whom and when.

This information is used to administer and deliver to you the products and/or services you have requested, to operate our Sites efficiently and improve our service to you, and to retain records of our business transactions and communications. By using the Sites and submitting personal information through the registration process you are agreeing that we may collect, hold, process and use your information (including personal information) for the purpose of providing you with the Site services and developing our business, which shall include (without limitation) the purposes described in the below paragraphs.

2. Monitoring use of our Sites

Where, as part of our Site services, we enable you to post information or materials on our Site, we may access and monitor any information which you upload or input, including in any password-protected sections. Subject to any necessary consents, we also monitor and/or record the different Sites you visit and actions taken on those Sites, e.g. content viewed or searched for. If you are a registered user (e.g. a subscriber or taking a trial), when you log on, this places a cookie on your machine. This enables your access to content and services that

are not publicly available. Once you are logged on, the actions you take - for example, viewing an article - will be recorded (subject to any necessary consents). We may use technology or a service provider to do this for us. This information may be used for one or more of the following purposes:

to fulfil our obligations to you;

to improve the efficiency, quality and design of our Sites and services;

to see which articles, features and services are most read and used

to track compliance with our terms and conditions of use, e.g. to ensure that you are acting within the scope of your user licence;

for marketing purposes (subject to your rights to opt-in and opt-out of receiving certain marketing communications) - see paragraph 3 below;

for advertising purposes, although the information used for these purposes does not identify you personally. Please see paragraph 5 below for more details;

to protect or comply with our legal rights and obligations; and

to enable our journalists to contact and interact with you online in connection with any content you may post to our Sites.

Please see paragraph 5 below for more information on cookies and similar technologies and a link to a page where you can turn them on or off.

3. Marketing

Some of your personal data collected under paragraphs 1 and 2 above may be used by us to contact you by e-mail, telephone and/or post for sending information or promotional material on our products and/or services and/or those of our other group companies. We give you the opportunity to opt-out of receiving marketing communications. Further detail can be found on the applicable Site and in the footer of each marketing communication sent by us, our group companies or service providers. See also "Consents and opt-outs" section below. We will not share your information with third parties for marketing purposes.

4. Profiling

We may analyse your personal information to create a profile of your interests and preferences so that we can contact you with information relevant to you.

5. Cookies and similar technologies

All our Sites use cookies and similar technical tools to collect information about your access to the Site and the services we provide.

What is a cookie?

When you enter some sites, your computer will be issued with a cookie. Cookies are text files that identify your computer to servers. Cookies in themselves do not identify the individual user, just the computer used.

Many sites do this whenever a user visits their site in order to track traffic flows, recording those areas of the site that have been visited by the computer in question, and for how long.

Users have the opportunity to set their computers to accept all cookies, to notify them when a cookie is issued, or not to receive cookies at any time. Selecting not to receive means that certain personalised services Exporta Publishing & Events Ltd offers cannot then be provided to that user.

Why do we use cookies?

1. Log In - Where we provide log in mechanisms for site users a cookie is created at login and for the duration of the session. Each cookie contains a unique reference number only (no personal information) which is used to confirm you are authorised.

2. Analytics - To allow us to keep track of traffic to our website we use cookies. The cookies simply tell us if you have previously visited our website so we can get more accurate figures for New vs Returning visitors.

Find and control your cookies

All of the major browser providers offer advice on setting up and using the privacy and security functions for their products. If you require technical advice or support for a specific browser/version please contact the provider or visit their website for further details: www.microsoft.com / www.mozilla.com / www.apple.com / www.opera.com / www.aol.com / www.netscape.com / www.flock.com / www.google.com.

We may use cookies to:

remember that you have used the Site before; this means we can identify the number of unique visitors we receive to different parts of the Site. This allows us to make sure we have enough capacity for the number of users that we get and make sure that the Site runs fast enough

remember your login session so you can move from one page to another within the Site;

store your preferences or your user name and password so that you do not need to input these details every time you visit the Site;

customise elements of the layout and/or content of the pages of Site for you;

record activity on our Sites so that we understand how you use our Sites enabling us to better tailor our content, services and marketing to your needs;

collect statistical information about how you use the Site so that we can improve the Site; and

gather information about the pages on the Site that you visit, and other information about other websites that you visit, so as to place you in a "market segment". This information is only collected by reference to the IP address that you are using, but does include information about the county and city you are in, together with the name of your internet service provider.

Most web browsers automatically accept cookies but, if you prefer, you can change your browser to prevent that, or to notify you each time a cookie is set. You can also learn more about cookies in general by visiting www.allaboutcookies.org which includes additional useful information on cookies and how to block cookies using different types of browser. Please note however, that by blocking, deleting or turning off cookies used on the Site you may not be able to take full advantage of the Site.

6. E-mail tracking

E-mail tracking is a method for monitoring the e-mail delivery to those subscribers who have opted-in to receive marketing e-mails from GTR, including GTR Africa, GTR Asia, GTR Americas, GTR Europe, GTR Mena, GTR eNews, Third party e-mails and GTR Ventures.

Why do we track e-mails?

So that we can better understand our users' needs, we track responses, subscription behaviour and engagement to our e-mails - for example, to see which links are the most popular in newsletters. They enable us to understand the consumers journey through metrics including open rate, click-through rate, bounces and unsubscribes. Any other purposes for which Exporta Publishing & Events Ltd wishes to use your personal data will be notified to you and your personal data will not be used for any such purpose without obtaining your prior consent.

How do you track GTR eNewsletters?

To do this, we use pixel GIFs, also known as "pixel tags" - these are small image files that are placed within the body of our e-mail messages. When that image is downloaded from our web servers, the e-mail is recorded as being opened. By using some form of digitally time-stamped record to reveal the exact time and date that an e-mail was received or opened, as well the IP address of the recipient.

7. Consents and opt-outs

You can give your consent to opt-out of all or any particular uses of your data as indicated above by:

Indicating at the point on the relevant Site where personal data is collected

Informing us by e-mail, post or phone

Updating your preferences on the applicable Site or eNewsletter (unsubscribe and preference options are available in the footer of each eNewsletter)

To turn cookies and similar technologies on and off, see the information in paragraph 5 above. Any questions regarding consents and opt-outs should be sent by e-mail to privacy@gtreview.com or by writing to Data Protection Officer at, Exporta Publishing & Events Ltd, 4 Hillgate Place, London, SW12 9ER, United Kingdom. Alternatively, you can telephone our London headquarters at +44 (0) 20 8673 9666.

8. Disclosures

Information collected at one Site may be shared between Exporta Publishing & Events Ltd and other group companies for the purposes listed above.

We may transfer, sell or assign any of the information described in this policy to third parties as a result of a sale, merger, consolidation, change of control, transfer of assets or reorganisation of our business.

9. Public forums, message boards and blogs

Some of our Sites may have a message board, blogs or other facilities for user generated content available and users can participate in these facilities. Any information that is disclosed in these areas becomes public information and you should always be careful when deciding to disclose your personal information.

10. Data outside the EEA

Services on the Internet are accessible globally so collection and transmission of personal data is not always limited to one country. Exporta Publishing & Events Ltd may transfer your personal data, for the above-listed purposes to other third parties, which may be located outside the European Economic Area and/or with a different level of personal data protection. However, when conducting transfers, we take all necessary steps to ensure that your data is treated reasonably, securely and in accordance with this Privacy Statement.

Who has access to your information?

Confidentiality and Security of Your Personal Data

We are committed to keeping the data you provide us secure and will take reasonable precautions to protect your personal data from loss, misuse or alteration.

However, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our Site; any transmission is at your own risk. Once we have received your information, we will use strict procedures and security features described above to try to prevent unauthorised access.

We have implemented information security policies, rules and technical measures to protect the personal data that we have under our control from:

unauthorised access

improper use or disclosure

unauthorised modification

unlawful destruction or accidental loss

All our employees, contractors and data processors (i.e. those who process your personal data on our behalf, for the purposes listed above), who have access to, and are associated with the processing of your personal data, are obliged to keep the information confidential and not use it for any other purpose than to carry out the services they are performing for us.

Responsibilities

Everyone who works for or with Exporta Publishing & Events Ltd has some responsibility for ensuring data is collected, stored and handled appropriately. Each team handling personal data must ensure that it is handled and processed in line with this policy and data protection principles. However, the following people have key areas of responsibility. The board of directors is ultimately responsible for ensuring that Exporta Publishing & Events Ltd meets its legal obligations.
Name of Data Controller
The Data Controller is Exporta Publishing & Events Ltd. Exporta Publishing & Events Ltd is subject to the UK Data Protection Act 1998 and is registered in the UK with the Information Commissioner`s Office.

How to access, update and erase your personal information

If you wish to know whether we are keeping personal data about you, or if you have an enquiry about our privacy policy or your personal data held by us, in relation to any of the Sites, you can contact the Data Protection Officer via:

By writing to this address: Data Protection Officer, Exporta Publishing & Events Ltd, 4 Hillgate Place, London, SW12 9ER, UK

Telephone: +44 (0) 20 8673 9666

E-mail: privacy@gtreview.com

Upon request, we will provide you with a readable copy of the personal data which we keep about you. We may require proof of your identity and may charge a small fee (not exceeding the statutory maximum fee that can be charged) to cover administration and postage.

Exporta Publishing & Events Ltd allows you to challenge the data that we hold about you and, where appropriate in accordance with applicable laws, you may have your personal information:

Disclosing data for other reasons

In certain circumstances, the Data Protection Act allows personal data to be disclosed to law enforcement agencies without the consent of the data subject. Under these circumstances, Exporta Publishing & Events Ltd, will disclose requested data. However, the Data Controller will ensure the request is legitimate, seeking assistance from the board and from the company's legal advisors where necessary.

Changes to this Privacy Statement

We will occasionally update this Privacy Statement to reflect new legislation or industry practice, group company changes and customer feedback. We encourage you to review this Privacy Statement periodically to be informed of how we are protecting your personal data.

Providing information

Exporta Publishing & Events Ltd aims to ensure that individuals are aware that their data is being processed, and that they understand.

How the data is being used

How to exercise their rights

To this end, the company has a privacy statement, setting out how data relating to individuals is used by the company. This is available on request and available on the company's website.

Review of this policy

We keep this Policy under regular review. This Privacy Statement was last updated in April 2018.

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HSBC rolls out first sustainability-linked trade finance deal in Hong Kong

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HSBC has arranged a trade facility for multinational garment manufacturing company Epic Group that it says is its first sustainability-linked trade finance transaction in Hong Kong. The proceeds will support Epic Group's working capital and trade cycle, with pricing tied to its performance in greenhouse gas emissions intensity, freshwater use intensity, as well as Higg ...

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Alliance Bank Digital SME Lending | Alliance Bank Malaysia

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https://www.wallstreetmojo.com/bankers-acceptance/

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Banker's Acceptance Definition

The banker's acceptance is a financial instrument that the bank (instead of the account holder) guarantees for the payments at a future date. It simply means that the bank has accepted the liability to pay the third party if the account holder defaults. It is commonly used in cross-border trade to assure exporters against counterparty default risk.

How Does Banker's Acceptance Work?

An importer enters into a transaction with the exporter from another country. The exporter is ready to supply the whole quantity to the port of the importer country. First, however, the exporter needs an assurance of payment. On the other hand, the importer is doubtful whether the exporter will supply the goods with the correct quantity and appropriate quality after full payment is made to the exporter.

Hence both the parties have some transaction-related risks. Here is where banker's acceptance comes into play.

It provides financial support to importers as well. If everything goes well, the banker clears the payment on the due date specified on the banker's acceptance. The financial banker will charge a commission to the account holder for such a service.

You are free to use this image on your website, templates etc, Please provide us with an attribution linkArticle Link to be Hyperlinked
For eg:
Source: Banker's Acceptance (wallstreetmojo.com)

Example

The German firm can either hold the bill until maturity or discount it today through the German bank. By ignoring, it receives the amount today itself with a cut of 6.235%, i.e., it receives $9,37,650. That is called discounting of the bill.

The German banker has further options to either hold until maturity to receive $1 million or discount it further to another party. That goes on till the banker's acceptance is held till maturity. The ultimate holder gets the face value.

Characteristic

Banker's acceptance is available only for customers with good credit history. Such customers are usually corporate entities with good credit history. Such creditworthiness is also linked to the investment in bonds.

Obtaining Banker's Acceptance

A business entity that wants to enter into a high-value transaction will approach its banker with an account. It needs to provide details of the trade to be executed and the amount of credit required.

The banker will assess the credibility of the account holder on various grounds, particularly the account holder's credit history. If it is satisfied on all fronts, it will accept the liability on behalf of the account holder.

The account holders need to prove sufficient funds on the execution date and pay for the charges to the bank.

Banker's Acceptance Rates and Marketability

Benefits

The account holder (i.e., the importer) against whose default the assurance is provided need not pay the amount in advance. The liability amount gets debited only on the due date of payment.

Banker's acceptance facilitates trade between the two unknown parties. In addition, it helps build trust between the business entities.

The exporter is assured about its payment, and the importer is assured about the timely receipt of goods.

The exporter is assured about its payment, and the importer is assured about the timely receipt of goods.

Guarantees in payment promote the business.

Risks

To hedge the risk of the banker, it may ask the importer to provide collateral security in the name of the bank.

Even if the banker has done the fundamental check, it still faces the liquidity risk from the importer.

Recommended Articles

This has been a guide to Banker's Acceptance and its definition. Here we discuss characteristics, example, and how it works along with benefits and risk. You may learn more about financing from the following articles -

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The banker's acceptance is a financial instrument that the bank (instead of the account holder) guarantees for the payments at a future date. It simply means that the bank has accepted the liability to pay the third party if the account holder defaults. It is commonly used in cross-border trade to assure exporters against counterparty default risk.

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UOB has extended its first green trade finance facilities to Musim Mas Group and Barramundi Group, with the goal of helping the two build on their sustainable initiatives and strengthen their supply chain resilience.

The facilities, whose amounts were undisclosed, are under the Green Finance Industry Taskforce's Green and Sustainable Trade Finance and Working Capital Framework.

Palm oil merchandiser and distributor Musim Mas Group says that it will use the funding for its working capital needs, in particular for sourcing certified palm oil from responsible suppliers.

Barramundi Group, a barramundi aquaculture company, plans to use the funding to source sustainable raw materials, such as using climate-resilient and sustainable technologies. This is part of its plans to expand its sustainability initiatives for greater resilience and security in the seafood ecosystem.

There is more than S$1t worth of trade that flows through Singapore, according to data from Singstat. Of these, more than S$90b meets the requirements of being green and sustainable, according to Frederik Chin, head of group wholesale banking and markets. UOB.

These trade flows provide an immense opportunity for UOB to work with companies to offer green trade financing and to support their trade flows through our regional network capabilities, he added.

"Companies that qualify for a green trade financing facility have taken steps to mitigate their environmental, social and governance risks such as identifying suppliers with good overall management practices and building more resilient supply chains," said Chin. "They are also at the forefront of an industry megatrend."

In order to qualify for green trade financing from UOB, Musim Mas Group and Barramundi Group both outlined a clear sustainability strategy and provided documents that show how the funds will be used, the bank said. This is the same for other companies that wish to qualify for green trade financing.

They also need to submit records that demonstrate the positive sustainability outcomes from their business activities or trades related to the green trade financing.

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UOB grants green trade finance facilities to Musim Mas, Barramundi Group

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More than S$90b of trade flows meet green and sustainable requirements in Singapore.UOB has extended its first green trade finance facilities to Musim Mas Group and Barramundi Group, with the goal of helping the two build on their sustainable initiatives and strengthen their supply chain resilience.The facilities, whose amounts were

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Standard Chartered has successfully executed its first green trade finance facility to support Amplus Energy Solutions FZE, a subsidiary of Amplus Solar, in its solar generation business. Amplus Solar is a member of the PETRONAS Group and is Asia's leading distributed energy company which provides low-carbon energy solutions to its industrial and commercial customers. This facility is a significant milestone towards the implementation of sustainable practices across ecosystems and in building more resilient supply chains.

Standard Chartered's newly introduced Sustainable Trade Finance Proposition in UAE, which applies a sustainability lens to its entire suite of trade finance products, allows the Bank to support:

1. Sustainable goods: Working with customers and partners to finance underlying goods that meet agreed sustainability standards.

2. Sustainable suppliers: Supporting trade for suppliers who meet acceptable thresholds against ESG ratings or metrics such as gender equality, responsible sourcing criteria and water use.

3. Sustainable end-use: Focusing on trade financing in sustainable industries including renewable energy, energy efficiency, the blue economy, sustainable infrastructure, water management and clean transportation.

4. Transition industries: Helping industries transition and reduce their carbon footprint by offering trade financing that recognises efforts to help reduce emissions.

Rola Abu Manneh, Chief Executive Officer, Standard Chartered UAE, said: " It is our pleasure to announce the bank's first green trade facility for the Group in support of PETRONAS, and its UAE-based subsidiary, Amplus Dubai, in their progress towards adopting sustainable practices through the enhancement of their global trade processes. With our local expertise, international presence, and robust Sustainable Trade Finance Proposition, Standard Chartered is well positioned to support companies in developing sustainable and resilient supply chains, in line with our commitment to drive capital towards achieving the UN's Sustainable Development Goals."

"We look forward to growing our partnership with Standard Chartered, that now spans across our presence in India and Dubai. Moving ahead with the green financing facility, we are confident that we can further expand our green footprint across new regions and support companies in achieving their sustainability goals" said Sanjeev Aggarwal, Managing Director and Chief Executive Officer, Amplus Solar.

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Standard Chartered Partners With Amplus Energy Solutions To Improve Its Trading Sustainability | The Fintech Times

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Standard Chartered has successfully executed its first green trade finance facility to support Amplus Energy Solutions FZE, a subsidiary of Amplus Solar, in its solar generation business. Amplus Solar is a member of the PETRONAS Group and is Asia's leading distributed energy company which provides low-carbon energy solutions to its industrial and commercial customers.

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Trade is the lifeblood of the global economy—it drives growth and competitiveness. It promotes fairness. It spurs innovation and efficiency. When trade flows in a rules-based system, jobs, wages, and investment increase.

Underpinning trade at every stage of the global supply chain: trade finance. By providing liquidity and cash flows and lowering risks, trade finance ensures that buyers receive their goods and sellers receive their payments. Simply put, the movement of goods and services across borders doesn’t occur without trade finance. Yet the world faces a massive and persistent trade finance gap—by some estimates as large as $6.5 trillion—as the pandemic continues to hit businesses across the globe.

The COVID-19 crisis arrived during a transformative period for trade finance, largely through digitization and the emergence of new platforms. As we discussed in a panel at IFC’s recent Financial Institutions Conference, the sector now has an opportunity to continue its evolution and emerge stronger from the crisis.

We see three key trends in the world of trade finance. First, banks, financial institutions and technology providers need to work together to ensure that liquidity is getting to the places where it’s needed most. While we haven’t seen anything like the reduction in liquidity of the Global Financial Crisis of 2008, the pandemic has caused banks to focus their funding on established relationships. This “flight to quality” has left many worthy businesses—particularly small and medium-sized enterprises (SMEs) in developing countries—without an option for trade finance.

This risk aversion from global banks needs to be remedied. In the short term, multilateral development banks can provide vital support. But in the longer term, local financial sectors will need to strengthen their ability to finance their own trade. That’s where new platforms can play a major role  in disseminating and managing risks across institutions.

The second trend we see is a more intense movement toward innovative technologies and digitization. For an industry that has been based on paper for centuries, the embrace of technology hasn’t been instigated by COVID-19, but it has been accelerated. The “procurement super-cycle” at banks will last long after the pandemic had subsided. To fully reap the benefits of new technologies, the entire trade ecosystem—banks, regulators, border agencies, trade bodies, and corporates—must work together to apply digital innovation and drive efficiencies.

The third trend affecting trade finance now is related to the product innovation heralded by the rampant digitization. New platforms, as tools to aggregate and analyse huge volumes of data in real time, can drive intelligent models for banks, enabling them to innovate around financing solutions in the same way that their customers are innovating around products. These sort of shifting business models were ripe for financial innovation from banks. For example, data collection and analysis can be a boon to the industry. As platforms collect granular data on transactions, the ability for banks to understand how their financing can support sustainable activities is immeasurably enhanced.

The current landscape is challenging, but we are hopeful. Despite the hardship caused by the pandemic, the crisis has also reinforced a desire for banks, global institutions, and technology providers to work together , both to support a strong recovery and to build an even stronger trading ecosystem around the world.

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The digital transformation of trade finance: An urgent present and a bright future

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The digital transformation of trade finance: An urgent present and a bright future

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During the recent EY webcast on global trade finance, we discuss how global trade has been disrupted and redefined by the pandemic.

The effects of the COVID-19 crisis on trade finance have been immense. Organizations are battling to survive the impact of the pandemic and are anxious to determine how they can persevere during this tumultuous time.

During our recent webcast with the International Trade and Forfaiting Association, EY banking and supply chain professionals, as well as other industry participants, we discussed this critical topic. Already viewed by over 7,000 executives across the financial services, energy, consumer, manufacturing and health care sectors, the webcast, How global trade finance is being disrupted and redefined, comes at a critical time for trade finance and the wider global trade industry.

The World Trade Organization estimates that world merchandise trade could decline by between 13% and 32% ¹ in 2020, a much steeper drop than the 9% contraction observed at the height of the 2008-09 global financial crisis.

This, in turn, has affected the trade finance sector, with banks contending with significant operational continuity challenges, and completing fewer letters of credit and invoice discounting transactions than usual.

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How trade finance can operate effectively in the wake of COVID-19

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During the recent EY webcast on global trade finance, we discuss how global trade has been disrupted and redefined by the pandemic. The effects of the COVID-19 crisis on trade finance have been immense. Organizations are battling to survive the impact of the pandemic and are anxious to determine how they can persevere during this tumultuous time.

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RHB Import Trade Financing | RHB Malaysia

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Agro Bank

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Digital management of Trade Finance activities through a scalable solution easy to integrate with your bank’s Information System.

Digital Trade Finance is the ideal applicative solution for banks seeking to manage digitally all the events directly and indirectly connected to typical Trade Finance operations, in particular processing of Documentary Credits, Documentary Collections, International Guarantees, Export Advances/Import Financing.
The phases managed by the solution range from precontractual analysis (e.g. evaluations and consultancy on Import/Export Documentary Credit issuing and International Guarantees) to pre-analysis, analysis and reconciliation of documents in use/under examination and settlement of transactions.
The solution is managed through a high performance application back-end with an applicative interface able to create a totally digital dossier comprising all the typical elements necessary to carry out the operations.
A series of automatic processes associates with the dossier and stores:

draft contract

series 7xx and 4xx SWIFT messages

emails and related attachments exchanged among the various parties (inside and/or outside the organization)

documents in “use” created digitally or scanned/digitized

remittance letters, accounting entries and payment orders

According to the bank’s technical-organizational requirements, the solution also enables the creation directly from the application of the above listed items, thus greatly simplifying the processing.
The various processes are guided by dedicated  workflows oriented towards teamwork and online assistance, configurable by the bank and created to share the various management experiences and techniques.
Each process is appropriately recorded in a specific operational log. Export data functions on distributed computing files (e.g. XLS) permit ex-post analysis of the processes carried out.
Digital Trade Finance simplifies the management of information and documents, allowing the user to dedicate the time saved on low value-added tasks to more complex activities with higher added value (e.g. document and contract reconciliation, specialist consultancy to support the internationalization of businesses).
From a technological viewpoint, the solution can integrate OCR/AI processes to assist in analysis of documents and of the information they contain and/or present in external archives (definition of control rules, checks on lists for national and international regulatory compliance).

totally digital management of the Trade Finance dossier

reduction of processing times

shared work/sharing expertise and know-how

reduction of operating risks

more streamlined and rapid procedures

simple, rapid and well-structured dialog system with control of all counterparts (inside and outside the organization)

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Digital management of Trade Finance activities through a scalable solution easy to integrate with your bank's Information System.

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Global Shipping Business Network (GSBN), an independent, not-for-profit technology consortium building a blockchain-enabled operating system designed to redefine global trade, today announced that its Trade Finance Advisory Group has reached a new milestone, with its first proofs-of-concepts for trade finance products since its inception in September last year.

Comprised of Bank of China (Hong Kong) Limited (BOCHK), DBS Bank and The Hongkong and Shanghai Banking Corporation Limited (HSBC), GSBN’s Trade Finance Advisory Group aims to build upon blockchain technology to digitally enhance trade finance, by improving the end-to-end operational efficiency as well as the transparency of data in the supply chain.

Following six months of close collaboration with the group’s partner institutions, GSBN has reached proofs-of-concepts for two trade finance products, Open Account and Letter of Credit, that harness trusted data direct from the shipping industry via GSBN.

For Open Account, applicants can authorise their bank to directly inquire Bill of Lading data via GSBN’s blockchain-enabled platform for their proof of shipment. Similarly, for Letter of Credit, applicants can authorise their bank to use an electronic Bill of Lading (eBL) application built on GSBN’s platform to acquire relevant eBL information and instruct a title transfer.

Trade finance solutions are among the first banking focused solutions under development in GSBN’s growing suite of products. For small to medium sized enterprises (SMEs), these digitally enabled solutions enable accessible, fast and equitable access to trade finance. Meanwhile for financial institutions, this translates into better risk management, cost efficiencies and an overall better customer experience. GSBN has the long-term vision of integrating all products including its shipping product Cargo Release which cuts the time for cargo to be document-ready for release from days to hours, on its blockchain-enabled platform to deliver a one stop and unified user experience.

Bertrand Chen, CEO at GSBN, said, “The global trade finance gap is set to reach USD 2.5 trillion unless we harness technology to cut through the complexities and siloes between supply chains. Reaching proofs-of-concepts of trade finance solutions is a testament to the commitment and momentum of this group, that we are accelerating the development of scalable, real-world solutions to bridge this gap.”

James Ho, Deputy General Manager of Transaction Banking Department from BOCHK, said, “BOCHK has been a close partner of GSBN since 2021, with a goal to facilitate trade digitalisation process between the finance and the shipping industries. We see today’s milestone as a critical step in closing the global trade finance gap, contributing positively to the recovery of the global economy. We will continue to work together with GSBN to push forward the live customer pilots and look forward to bringing benefits of the innovative solutions to trading partners around the world.”

Sriram Muthu Krishnan, Managing Director & Group Head of Product Management from DBS Bank, said, “Removing friction from the trade finance process is essential to unlocking new value and growth for businesses around the globe. We are glad to have completed proofs-of-concepts around digital bills of ladings, as part of the GSBN Trade Finance Advisory Group. We are deeply supportive of industry efforts to digitalise the cross-border trade ecosystem.”

Ajay Sharma, Regional Head of Global Trade and Receivables Finance for Asia Pacific at HSBC, said, “The need to further digitise trade has been made abundantly clear by the pandemic. By stripping out inefficiencies and removing friction, we can increase the volume and velocity of trade, decrease time to cash, and deliver other benefits that will improve the overall customer experience. HSBC is pleased to work hand-in-hand with GSBN and other partners to advance trade digitisation.”

Following the proofs-of-concepts, the Trade Finance Advisory Group will explore opportunities to conduct live customer pilots to validate the new protocols.

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GSBN develops proof-of-concept for two blockchain-based trade finance products

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Global Shipping Business Network (GSBN), an independent, not-for-profit technology consortium building a blockchain-enabled operating system designed to redefine global trade, today announced that its Trade Finance Advisory Group has reached a new milestone, with its first proofs-of-concepts for tra…

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https://ecdpm.org/great-insights/multiple-dimensions-trade-development-nexus/trade-financing-facilities-counter-cyclical-role-current-global-context/

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Alvarez, A.M. 2013. Trade-financing facilities: A counter-cyclical role in the current global context?. GREAT Insights, Volume 2, Issue 8. November 2013. Maastricht: ECDPM.
There have been several efforts from the international community to counteract the effects of the global financial crisis; firms operating in developing countries, which rely heavily on trade finance to support exports and imports, still face the lack of finance necessary to cover their financing needs. This situation hinders them to maintain their production and trade activities. The trade finance formula
How does trade finance support production of goods and services from developing countries? Trade finance refers to methods and instruments designed to support importers and exporters through the trade cycle. Exporters extend credit to importers until they pay, and at the same time, they need to finance their own import and purchase of raw materials and production to support their export sales. The transaction encompasses a circuit where firms extend credit and secure financing to customers and simultaneously receive credit from their suppliers. On both sides the transaction involves the risk of non-payment and therefore, can generate shocks.

Trade financing involves a wide array of instruments, structures and mechanisms, depending on the parties to the transaction, the sector, country of destination, term and conditions of the contracts, etc. Generally, the most important issues behind trade financing are financing the cash-to-cash cycle of the exporter and importer, as mentioned above, and risk mitigation needs related to the importer and/or the importer´s country (country risk and commercial risk). The general premise is that exporters want to accelerate their cash-to-cash cycle, thus seeking shorter tenors as well as lower as much as possible the risk profile of a trade transaction, and importers need to extend the payment tenors.
A bipolar world of access to trade financing
Large corporations, retailers and traders, at the helm of the global supply chains (GVCs), have succeeded in building a strong network of banks over the years and therefore have excellent access to a wide variety of financing structures and channels, which protect them even in times of crisis. Unfortunately the majority of the small and medium size enterprises (SMEs), mostly in the least developed countries (LDCs), are in the opposite situation. Besides being weaker financially wise and in higher risk countries, they lack the necessary formation and information of available trade financing products. To make it worse, the potential volumes are small as compared to the first group, therefore lacking the necessary leverage to insure access to banks and trade financing lines with interesting tenors and products. Hence the GVCs and related financing are dominated by large corporations and their network of banks with very little inclusion of SMEs which, when included, are obliged to accept difficult trading conditions with long repayment tenors when exporting or short payment terms when importing, all of this under very limited financing access.
Accessing international value chains through trade financing
The intermediation of financial institutions is therefore needed because of the opposite necessities on both sides of a trade transaction. Trade financing structures and products allow the parties in a transaction to maximise their working capital cycles, and also mitigate the risks involved in a transaction, shifting the risk away from the trading partners to a financial institution. To achieve that purpose there is a diversity of financial agents, from private and government owned banks, ExImbanks and DFIs, to trade financing funds, among others.
The role of government owned and multilateral trade financing agents
A number of multilateral development banks have played a key role in ensuring trade financing flows in the post-financial crisis period. This has been translated into an expansion of trade-finance facilitation programmes by these institutions. In this regard, the G-20 Summit's Initiative (2009) was useful to mobilise additional short-term finance and guarantees to support trade. The role played by the Trade Finance Facilitation Programs of institutions such as the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter American Bank, the Islamic Development Bank, and the World Bank, have been widely recognised. These institutions have been supporting the Aid for Trade (AfT) Initiative launched in Hong Kong in 2005.

There are also a number of development finance institutions (DFIs) and ExImbanks from developing countries and emerging economies focusing on supporting trade in goods and services, including through GVCs; increasing the internationalisation of SMEs and its integration into GVCs, and developing infrastructure projects (energy, transports, communications), among other domains. Given that their membership is composed almost exclusively by developing countries and emerging economies, DFIs and ExImbanks can assess better the needs and priorities at country and regional level, and this may also give a signal to enhance the institutions, including an increase in resource allocation. Some of these institutions also follow solidarity and regional integration as a guiding principle for their cooperation initiative, and embrace socially inclusive goals. This is, for example, the goal of the proposed Bank of the South and the Bank of the Bolivarian Alliance for the Peoples of Our Americas ( Spanish : Alianza Bolivariana para los Pueblos de Nuestra América, or ALBA).

Support from DFIs and ExImbanks to trade in goods and services of developing countries, particularly LDCs, and emerging economies is required in every phase of the production process; this becomes crucial when firms from these countries, and particularly SMEs, wish to join GVCs.

In Latin America and the Caribbean, the Development Bank of Latin America's (CAF) strongly support to the development of the vital physical infrastructure and the processes of integration and international competitiveness of the region, especially aimed at the areas of roads, energy and telecommunications among others. The Brazilian Development Bank (BNDES) is an example of an institution that is committed to national development but also increasingly guided by an internationalisation strategy. BNDES-exim provides Brazilian producers of goods and services with an important source of financing for trading with the rest of the world. Among its efforts, the increasing support of Brazilian companies trading in South America has been emphasised, in response to their strategy to strengthen commercial and financial ties across the continent. The Brazilian Export Financing Program (PROEX), which is managed by the Banco do Brasil , supports Brazilian exports of goods and services, especially by SMEs. The Central American Bank for Economic Integration (CABEI/BCEI) and the Foreign Trade Bank for Latin America (BLADEX) have noticeably gained high credit standing in the international community. CABEI has undertaken initiatives that promote intermediated credit to SMEs and has become the main regional provider of funding to the sector in Central America. It began with intermediated financing of microcredits and has gradually expanded its scope of action through other activities. BLADEX specialises in providing trade financing for the entire region, from Argentina to México and the Caribbean. It is a supranational bank originally established by the central banks of Latin American and Caribbean (LAC) countries to promote trade finance in the region and is also listed in the New York Stock Exchange (NYSE). The Latin American Association of Development Financing Institutions (ALIDE) has played a key role in promoting joint actions and coordinated participation of development banks and financial institutions focusing on Latin America and the Caribbean's socioeconomic progress and promotes exchange of experience with institutions from other regions.

The African Export Import Bank, whose goal is to stimulate a consistent expansion, diversification and development of African trade, has recently been awarded for its work in support of Africa's SMEs. The Nigerian Export Import Bank (NEXIM) aims to promote the diversification of the Nigerian economy and develop the external sector through the provision of services in support of non-oil exports, which includes the creative industry. NEXIM and the ExIm Bank of India have been cooperating in this field: a number of trade financing and infrastructure financing initiatives were introduced by the Export-Import Bank of India, including specific programs to support micro and SMEs. The latter has been awarded recognition from the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP) for its unique financing programme targeting the export-oriented Indian creative industry, which includes financing individual entrepreneurs, establishing infrastructure facilities for the creative industry and providing capacity building, reinforcing and promoting creative entrepreneurship .

Trade finance support is driven by the two main policy institutions in China, namely the China Development Bank (CDB) and the Ex-Im Bank of China. As an example of the type of negotiation that China is undertaking, it is possible to cite the CDB's infrastructure-related bilateral arrangements signed with selected countries linked to petroleum projects. Furthermore, the Korean Ex-Im Bank (KEXIM) has also been quite active in promoting South-South cooperation and the Türk ExImbank has partnered with the Nigerian ExImbank (NEXIM) to support activities in the non-oil Nigerian sector. ExImBank Malaysia, a government-owned development financial institution , provides a diverse range of products and services to Malaysian exporters; and the Philippines Export Credit Agency (Philguarantee), provides export loans and guarantees.
Constructing a new global financial architecture (suggested sub-heading)
As part of their long-term view to promote stable economic growth and help local firms to obtain cheap funding, cooperation initiatives among DFIs and ExImbanks have included the extension of lines of credits, exchange of staff, promotion of joint projects, among others. The Global Network of DFIs and ExImbanks (G-NEXID), composed of 24-members, aims to promote global trade and investment flows, especially between developing countries, within the framework of South-South cooperation. The Network was established in 2006 at the hands of the Secretary General of UNCTAD and is currently chaired by BLADEX.

More information on the role of development banks is included in the discussion paper DP152, Trade Finance Opportunities through South-South Cooperation, which can be found at www.ecdpm.org/dp152. The paper shows the need to strengthen national and regional institutions and financing trade of goods and services including through GVCs. It also praises the importance of coordinating activities and coming up with common policies to improve the conditions for and availability of trade financing. Some examples of cooperation initiatives such as G-NEXID, the Berne Union, the Prague Union, the International Development Finance Club (IDFC), the Amman Union, the Asian ExIm Banks Forum, ADFIAP, ALIDE and the proposed Brazil Russia India China South Africa (BRICS). Development Bank illustrate effective cooperation between institutions that adhere to different ideologies, face different levels of development and/or are geographically distant.

Setting up national development banks and/or ExImbanks requires a significant effort as well as bold decision making by governments, including the status of the institution, the most appropriate models of export credit, insurance and guarantee institutions that should be used as a reference, and the services that could be provided.

Nevertheless, given the rapid changes in the conditions and requirements of trade in today´s world, the dominance of open account terms of trade, accounting for more than 80% of the trade transactions, and the need for speed and efficiency, ExImbanks and DFIs traditionally specialised in mid to long term financing products, have an urgent task to adapt by reducing the lengthy processes and cumbersome paperwork, as well as increasing the range of short term financing, structures and risk mitigation products.

South-South cooperation is at the forefront of the debate on international economic development. Accordingly, the ways in which trade financing supports trade in goods and services and cooperation should be a major topic of debate and analysis in exploring joint work programs between development banks and ExImbanks. The existing partnership between UNCTAD and G-NEXID provides a useful means to facilitate such cooperation.

The impact of trade finance programmes in every stage of the production process, and particularly in the process of integrating national, regional and global value chains, deserves particular emphasis and involves different economic actors. Strengthening trade finance institutions should therefore be part of any post-financial crisis reform.
Ana María Alvarez is an Economic Affairs Officer atUNCTAD. The opinions expressed in this paper are those of the author and do not necessarily reflect the views of UNCTAD nor those of other experts or institutions that are mentioned therein.
This article was published in GREAT Insights Volume 2, Issue 8 (November 2013).

Economic recovery and transformation Trade

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Trade-Financing Facilities: Role in the Current Global Context? -ECDPM

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There have been several efforts from the international community to counteract the effects of the global financial crisis; firms operating in developing countries, which rely heavily on trade finance to support exports and imports, still face the lack of finance necessary to cover their financing needs.

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27https://www.aninews.in/news/business/business/bfsls-margin-trade-financing-with-one-of-the-lowest-interest-rates-is-a-powerful-tool-for-investors20220505163936/

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Pune (Maharashtra) [India], May 5 (ANI/BusinessWire India): Margin Trading Financing (MTF) is a useful arrow in the quiver used in the hunt for profits in the stock market. It helps to leverage delivery trades.
People can buy stocks of more value than the amount they have. The catch here is to earn a profit higher than the sum of margin, brokerage applicable and the interest incurred over the period for the leveraged position.
MTF Challenges to Overcome
Active investors need a discount broker offering MTF facility at the lowest possible interest rates. Generally, intraday traders get leverage while placing orders on their broker's platform, however, for delivery traders, the leverage is provided through a product called MTF. Using this, a share buyer can purchase shares of higher value in Delivery by just paying the margin amount.
Broker charges interest on the funded amount, as well as the brokerage on the order, placed. High brokerage costs and high MTF interest rates can add to costs depleting the profit margin whenever the position is squared off in a favorable situation. Investors can resolve this issue with one of the reputed discount brokers - Bajaj Financial Securities Ltd (BFSL).
BFSL's MTF Facility can Help
BFSL offers an affordable subscription-based annual trading plan to reduce the brokerage and MTF interest rates. The most distinguished subscription plan - Bajaj Privilege Club is a cost-saving trading plan for seasoned traders. Here are some features of Bajaj Privilege Club (BPC) subscription-based plan.
BPC Plan Features
One of the Lowest Brokerage: BPC subscribers pay one of the lowest brokerages as it charges a flat brokerage of Rs 5/- per order for day trading, F&O and Delivery.
Lowest Interest Rates: BPC offers the benefit of one of the lowest interest rate in the industry for MTF - 9.25% p.a. only. Traders need to pay only Rs 25.34 per day for Rs 1 lakh MTF. Clients can leverage their positions up to 3.5 times on delivery trades through MTF.

No Depository Participant Account Maintenance Charges: BFSL does not charge DP AMC from BPC clients.
Dealer Desk Support: BPC clients get the additional benefit of dedicated dealer desk support to address their queries on trade and MTF orders.
Thus, with BFSL, investors utilizing MTF can save a huge trading cost. Bajaj Privilege Club is available at annual subscription charges of Rs 9999 per annum which includes taxes. The huge savings in brokerage and the opportunities it opens to clients through low MTF interest rates assert the annual subscription charge which most seasoned traders prefer to opt for.
Other Subscription plans from Bajaj Financial Securities Limited:
Apart from BPC, investors can also choose the other subscription pack, known as the Professional Pack, offered by BFSL. Here, the annual subscription charge is Rs 2500 inclusive of taxes. The benefits offered are as below:
Brokerage: Rs 10 per order across segments
Margin Trade Financing: 12 per cent p.a.
AMC: 0
Simple & Secured Platform
Bajaj Financial Securities Limited strives to build a trading ecosystem that is easy and convenient to investors. This manifests not just in a simple user interface of its trading platform that is available on web and app (BFSLTRADE), but also in its value-added services like Margin Trade Financing facility. Clients can easily place MTF orders on trading application and track the interest report in the app itself. BFSL ensures client's transactions are safe and secured and any query is addressed through various service channels to maintain transparency in the process. Investors can open a demat& trading account with Bajaj Financial Securities Limited through 100 per cent online process.
This story is provided by BusinessWire India. ANI will not be responsible in any way for the content of this article. (ANI/BusinessWire India)

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BFSL's Margin Trade Financing with one of the lowest interest rates is a powerful tool for investors

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Pune (Maharashtra) [India], May 5 (ANI/BusinessWire India): Margin Trading Financing (MTF) is a useful arrow in the quiver used in the hunt for profits in the stock market. It helps to leverage delivery trades.People can buy stocks of more value than the amount they have.

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Please see paragraph 5 below for more information on cookies and similar technologies and a link to a page where you can turn them on or off.

3. Marketing

Some of your personal data collected under paragraphs 1 and 2 above may be used by us to contact you by e-mail, telephone and/or post for sending information or promotional material on our products and/or services and/or those of our other group companies. We give you the opportunity to opt-out of receiving marketing communications. Further detail can be found on the applicable Site and in the footer of each marketing communication sent by us, our group companies or service providers. See also "Consents and opt-outs" section below. We will not share your information with third parties for marketing purposes.

4. Profiling

We may analyse your personal information to create a profile of your interests and preferences so that we can contact you with information relevant to you.

5. Cookies and similar technologies

All our Sites use cookies and similar technical tools to collect information about your access to the Site and the services we provide.

What is a cookie?

When you enter some sites, your computer will be issued with a cookie. Cookies are text files that identify your computer to servers. Cookies in themselves do not identify the individual user, just the computer used.

Many sites do this whenever a user visits their site in order to track traffic flows, recording those areas of the site that have been visited by the computer in question, and for how long.

Users have the opportunity to set their computers to accept all cookies, to notify them when a cookie is issued, or not to receive cookies at any time. Selecting not to receive means that certain personalised services Exporta Publishing & Events Ltd offers cannot then be provided to that user.

Why do we use cookies?

1. Log In - Where we provide log in mechanisms for site users a cookie is created at login and for the duration of the session. Each cookie contains a unique reference number only (no personal information) which is used to confirm you are authorised.

2. Analytics - To allow us to keep track of traffic to our website we use cookies. The cookies simply tell us if you have previously visited our website so we can get more accurate figures for New vs Returning visitors.

Find and control your cookies

All of the major browser providers offer advice on setting up and using the privacy and security functions for their products. If you require technical advice or support for a specific browser/version please contact the provider or visit their website for further details: www.microsoft.com / www.mozilla.com / www.apple.com / www.opera.com / www.aol.com / www.netscape.com / www.flock.com / www.google.com.

We may use cookies to:

remember that you have used the Site before; this means we can identify the number of unique visitors we receive to different parts of the Site. This allows us to make sure we have enough capacity for the number of users that we get and make sure that the Site runs fast enough

remember your login session so you can move from one page to another within the Site;

store your preferences or your user name and password so that you do not need to input these details every time you visit the Site;

customise elements of the layout and/or content of the pages of Site for you;

record activity on our Sites so that we understand how you use our Sites enabling us to better tailor our content, services and marketing to your needs;

collect statistical information about how you use the Site so that we can improve the Site; and

gather information about the pages on the Site that you visit, and other information about other websites that you visit, so as to place you in a "market segment". This information is only collected by reference to the IP address that you are using, but does include information about the county and city you are in, together with the name of your internet service provider.

Most web browsers automatically accept cookies but, if you prefer, you can change your browser to prevent that, or to notify you each time a cookie is set. You can also learn more about cookies in general by visiting www.allaboutcookies.org which includes additional useful information on cookies and how to block cookies using different types of browser. Please note however, that by blocking, deleting or turning off cookies used on the Site you may not be able to take full advantage of the Site.

6. E-mail tracking

E-mail tracking is a method for monitoring the e-mail delivery to those subscribers who have opted-in to receive marketing e-mails from GTR, including GTR Africa, GTR Asia, GTR Americas, GTR Europe, GTR Mena, GTR eNews, Third party e-mails and GTR Ventures.

Why do we track e-mails?

So that we can better understand our users' needs, we track responses, subscription behaviour and engagement to our e-mails - for example, to see which links are the most popular in newsletters. They enable us to understand the consumers journey through metrics including open rate, click-through rate, bounces and unsubscribes. Any other purposes for which Exporta Publishing & Events Ltd wishes to use your personal data will be notified to you and your personal data will not be used for any such purpose without obtaining your prior consent.

How do you track GTR eNewsletters?

To do this, we use pixel GIFs, also known as "pixel tags" - these are small image files that are placed within the body of our e-mail messages. When that image is downloaded from our web servers, the e-mail is recorded as being opened. By using some form of digitally time-stamped record to reveal the exact time and date that an e-mail was received or opened, as well the IP address of the recipient.

7. Consents and opt-outs

You can give your consent to opt-out of all or any particular uses of your data as indicated above by:

Indicating at the point on the relevant Site where personal data is collected

Informing us by e-mail, post or phone

Updating your preferences on the applicable Site or eNewsletter (unsubscribe and preference options are available in the footer of each eNewsletter)

To turn cookies and similar technologies on and off, see the information in paragraph 5 above. Any questions regarding consents and opt-outs should be sent by e-mail to privacy@gtreview.com or by writing to Data Protection Officer at, Exporta Publishing & Events Ltd, 4 Hillgate Place, London, SW12 9ER, United Kingdom. Alternatively, you can telephone our London headquarters at +44 (0) 20 8673 9666.

8. Disclosures

Information collected at one Site may be shared between Exporta Publishing & Events Ltd and other group companies for the purposes listed above.

We may transfer, sell or assign any of the information described in this policy to third parties as a result of a sale, merger, consolidation, change of control, transfer of assets or reorganisation of our business.

9. Public forums, message boards and blogs

Some of our Sites may have a message board, blogs or other facilities for user generated content available and users can participate in these facilities. Any information that is disclosed in these areas becomes public information and you should always be careful when deciding to disclose your personal information.

10. Data outside the EEA

Services on the Internet are accessible globally so collection and transmission of personal data is not always limited to one country. Exporta Publishing & Events Ltd may transfer your personal data, for the above-listed purposes to other third parties, which may be located outside the European Economic Area and/or with a different level of personal data protection. However, when conducting transfers, we take all necessary steps to ensure that your data is treated reasonably, securely and in accordance with this Privacy Statement.

Who has access to your information?

Confidentiality and Security of Your Personal Data

We are committed to keeping the data you provide us secure and will take reasonable precautions to protect your personal data from loss, misuse or alteration.

However, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our Site; any transmission is at your own risk. Once we have received your information, we will use strict procedures and security features described above to try to prevent unauthorised access.

We have implemented information security policies, rules and technical measures to protect the personal data that we have under our control from:

unauthorised access

improper use or disclosure

unauthorised modification

unlawful destruction or accidental loss

All our employees, contractors and data processors (i.e. those who process your personal data on our behalf, for the purposes listed above), who have access to, and are associated with the processing of your personal data, are obliged to keep the information confidential and not use it for any other purpose than to carry out the services they are performing for us.

Responsibilities

Everyone who works for or with Exporta Publishing & Events Ltd has some responsibility for ensuring data is collected, stored and handled appropriately. Each team handling personal data must ensure that it is handled and processed in line with this policy and data protection principles. However, the following people have key areas of responsibility. The board of directors is ultimately responsible for ensuring that Exporta Publishing & Events Ltd meets its legal obligations.
Name of Data Controller
The Data Controller is Exporta Publishing & Events Ltd. Exporta Publishing & Events Ltd is subject to the UK Data Protection Act 1998 and is registered in the UK with the Information Commissioner`s Office.

How to access, update and erase your personal information

If you wish to know whether we are keeping personal data about you, or if you have an enquiry about our privacy policy or your personal data held by us, in relation to any of the Sites, you can contact the Data Protection Officer via:

By writing to this address: Data Protection Officer, Exporta Publishing & Events Ltd, 4 Hillgate Place, London, SW12 9ER, UK

Telephone: +44 (0) 20 8673 9666

E-mail: privacy@gtreview.com

Upon request, we will provide you with a readable copy of the personal data which we keep about you. We may require proof of your identity and may charge a small fee (not exceeding the statutory maximum fee that can be charged) to cover administration and postage.

Exporta Publishing & Events Ltd allows you to challenge the data that we hold about you and, where appropriate in accordance with applicable laws, you may have your personal information:

Disclosing data for other reasons

In certain circumstances, the Data Protection Act allows personal data to be disclosed to law enforcement agencies without the consent of the data subject. Under these circumstances, Exporta Publishing & Events Ltd, will disclose requested data. However, the Data Controller will ensure the request is legitimate, seeking assistance from the board and from the company's legal advisors where necessary.

Changes to this Privacy Statement

We will occasionally update this Privacy Statement to reflect new legislation or industry practice, group company changes and customer feedback. We encourage you to review this Privacy Statement periodically to be informed of how we are protecting your personal data.

Providing information

Exporta Publishing & Events Ltd aims to ensure that individuals are aware that their data is being processed, and that they understand.

How the data is being used

How to exercise their rights

To this end, the company has a privacy statement, setting out how data relating to individuals is used by the company. This is available on request and available on the company's website.

Review of this policy

We keep this Policy under regular review. This Privacy Statement was last updated in April 2018.

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Malaysia stands chance to seize more of Islamic trade finance market

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Malaysia has an opportunity to "grow significantly" in the Islamic trade finance market, according to the World Bank, as the global Islamic finance sector is set for impressive expansion of at least 10% over 2021 to 2022. In a report titled Islamic trade finance: An opportunity for Malaysia, the organisation states that Malaysia has thus ...

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International Trade Administration | Trade.gov

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The international reserves of BNM amounted to $111 billion of June 15, 2021. The reserves position is sufficient to finance 8.2 months of retained imports and is 1.1 times total short-term external debt.

Methods of Payment

Exports to Malaysia may be financed through cash in advance, open account, or letters of credit issued to importers by banks in Malaysia. Financing is readily available in the domestic market to Malaysian importers. Exporters requiring credit ratings can obtain them from two local credit rating institutions, the RAM, and the Malaysian Rating Corp. Berhad (MARC).

For more information about the methods of payment or other trade finance options, please read the available Trade Finance Guide.

Banking Systems

The structure of the Malaysian financial system has evolved to become less fragmented through consolidation and rationalization. BNM, the country's central bank, directed the merger of Malaysia's local banking institutions into ten anchor banks, which was completed in 2002. The government encouraged further mergers among the local banking institutions to ensure competitiveness with international banks. As of 2021, there are eight local banks in the country. BNM licenses and regulates businesses such as commercial banking, investment banking, Islamic banking, and money brokering.

Malaysia's Islamic finance industry has been in existence for over 30 years and is governed by the Islamic Banking Act 1983. In 2020, Malaysia's Islamic banking assets reached $65.6 billion, with an average growth rate of 18-20 percent annually.

Malaysia has a significant number of full-fledged Islamic banks, including several foreign-owned entities, conventional institutions that have established Islamic subsidiaries, and entities that are conducting foreign currency business. All financial institutions are permitted to conduct national currency Malaysian Ringgit (RM) and non-RM businesses. As of July 2021, there are 16 Islamic local and foreign banks operating in Malaysia. Foreign banks with operations in Malaysia are allowed 100 percent equity participation.

Foreign Exchange Controls

Malaysian FEC is governed by the Exchange Control Act, 1953. The Controller of Foreign Exchange is the Governor of BNM, who also acts as the foreign exchange dealings regulator in Malaysia. The Bank is committed to ensuring the Foreign Exchange Administration rules continue to support and enhance the competitiveness of the economy through the creation of a more supportive and facilitative environment for trade, business and investment activities.

The Act imposes general restrictions on foreign exchange dealings by residents and non-residents. There are no restrictions for non-residents to invest in Malaysia to purchase RM assets, such as land property and securities. There is also no restriction for non-residents to transfer abroad, in foreign currency, all profits, returns and divestment proceeds from their investments in Malaysia.

Foreign Investment Committee (FIC) guidelines before June 30, 2009, states that any acquisition of property by foreign interest requires FIC approvals. Since the FIC guidelines liberalization, the approval for property acquisition will be needed from the Economic Planning Unit of the Prime Minister's Department if the acquisition dilutes Bumiputra or government interest for properties exceeding RM20 million (approximately $5.62 million). This acquisition encompasses direct or indirect via shares.

Restrictions apply for residents of Malaysia. No person is allowed, among other conditions, to buy or borrow foreign currency from, or sell or lend foreign currency to any person, to make any payment in Malaysian Ringgit to a non-resident in and outside Malaysia, or to deal in ringgit assets in Malaysia without the prior permission of the Controller.

U.S. Banks and Local Correspondent Banks

Currently, three U.S. banks have operations in Malaysia: Bank of America, Citibank, and J.P. Morgan Chase Bank. Bank of New York Mellon and the Northern Trust Company have representative offices in Kuala Lumpur. The island of Labuan is Malaysia's offshore banking center.

Local banks in Malaysia have correspondent relationships with banks in the United States.

Digital Banking License 2021: In July 2021, BNM announced it received 29 applications for a digital bank license under the Financial and the Islamic Financial Services Acts 2013, following a six-month application period that ended on June 30, 2021. A diverse range of parties have submitted applications for the digital bank license, ranging from banks, industry conglomerates, technology firms, e-commerce operators, FinTech players, cooperatives, and state governments.

Successful applicants that meet all prudential criteria will be expected to contribute towards greater financial inclusion by offering products and services to address market gaps in the underserved and unserved segments. This includes promoting suitable and affordable financial solutions by leveraging on innovative application of technology. Up to five licenses may be issued, and notification of successful applications will be made in the first quarter of 2022.

BNM is expected to issue five licenses by the first quarter of 2023 with an asset threshold of no more than $7.23 million for the first three to five years of operations. Following the initial phase, the limit will be removed, and the digital banks will be subject to similar regulations as conventional banks.

For more information:
Licensing Framework for Digital Banks
List of Digital Banking Contenders 2021

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The international reserves of BNM amounted to $111 billion of June 15, 2021. The reserves position is sufficient to finance 8.2 months of retained imports and is 1.1 times total short-term external debt. Exports to Malaysia may be financed through cash in advance, open account, or letters of credit issued to importers by banks in Malaysia.

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https://www.gtreview.com/news/africa/gcb-bank-secures-us117mn-trade-finance-facility/

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Privacy Policy

Our privacy commitments

This Privacy Policy outlines the information we may collect about you in relation to your use of our websites, events, related publications and services ("personal data") and how we may use that personal data. It also outlines the methods by which we and our service providers may (subject to necessary consents) monitor your online behaviour to deliver customised advertisements, marketing materials and other tailored services. This Privacy Policy also tells you how you can verify the accuracy of your personal data and how you can request that we delete or update it.

This Privacy Policy applies to all websites operated by Exporta Publishing & Events Ltd (as indicated on the relevant website).

This privacy statement does not cover the activities of third parties, and you should consult those third-party sites' privacy policies for information on how your data is used by them.

Any questions regarding this Policy and our privacy practices should be sent by e-mail to privacy@gtreview.com or by writing to Data Protection Officer at, Exporta Publishing & Events Ltd, 4 Hillgate Place, London, SW12 9ER, United Kingdom. Alternatively, you can telephone our London headquarters at +44 (0) 20 8673 9666.

Who are we?

Established in 2002 and with offices in London and Singapore, Exporta Publishing & Events Ltd is the world's leading trade and trade finance media company, offering information, news, events and services for companies and individuals involved in global trade.

Our principal business activities are:

Business-to-Business financial publishing. We provide a range of products and services focused on international commodities, export, supply chain and trade finance markets including magazines, newsletters, electronic information and data

Organisers of seminars, conferences, training courses and exhibitions for the finance industry

Exporta Publishing & Events Ltd is a company registered in the United Kingdom with company number 4407327 | VAT Registration: 799 1585 59

Data Protection Policy

This Data Protection Policy explains when and why we collect personal information about people who visit our website, how we use it, the conditions under which we may disclose it to others and how we keep it secure.

Why do we collect information from you?

Our primary goal in collecting personal data from you is to give you an enjoyable customised experience whilst allowing us to provide services and features that will meet your needs.
We collect certain personal data from you, which you give to us when using our Site and/or registering or subscribing for our products and services. However, we also give you the option to access our Sites' home pages without subscribing or registering or disclosing your personal data.

We also collect certain personal data from other group companies to whom you have given information through their websites (including, by way of example, Exporta Publishing & Events Ltd and subsidiaries, in accordance with the purposes listed below). Should we discover that any such personal data has been delivered to any of the Sites, we will remove that information as soon as possible.

Why this policy exists

This Data Protection Policy ensures Exporta Publishing & Events Ltd:

Complies with data protection law and follow good practice

Protects the rights of staff, customers and partners

Is open about how it stores and processes individuals' data

pretexts itself from the risk of a data breach

We may change this Policy from time to time so please check this page occasionally to ensure that you're happy with any changes. By using our website, you're agreeing to be bound by this Policy.

Data protection law

The Data Protection Act 1998 described how organisations - including Exporta Publishing & Events Ltd - must collect, handle and store personal information. These rules apply regardless of whether data is stored electronically, on paper or on other materials. To comply with the law, personal information collected must be stored safely, not disclosed unlawfully and used fairly.

The Data Protection Act is underpinned by eight important principles. These say that personal data must:

Be processed fairly and lawfully

Be obtained only for specific, lawful purposes

Be adequate, relevant and not excessive

Be accurate and kept up to date

Not be held for any longer than necessary

Processed in accordance with the rights of data subjects

Be protected in appropriate ways

Not be transferred outside the European Economic Area (EEA), unless that country of territory also ensures an adequate level of protection

How do we collect information from you?

We obtain information about you when you use our website, for example, when you contact us about products and services, when you register for an event, register to receive eNewsletters, subscribe or register for a trial to our GTR magazine/website.

Types of Personal Data Held and its Use

1. Customer Services and Administration

On some Sites, Exporta Publishing & Events Ltd collects personal data such as your name, job title, department, company, e-mail, phone, work and/or home address, in order to register you for access to certain content, subscriptions and events. In addition, we may also store information including IP address and page analytics, including information regarding what pages are accessed, by whom and when.

This information is used to administer and deliver to you the products and/or services you have requested, to operate our Sites efficiently and improve our service to you, and to retain records of our business transactions and communications. By using the Sites and submitting personal information through the registration process you are agreeing that we may collect, hold, process and use your information (including personal information) for the purpose of providing you with the Site services and developing our business, which shall include (without limitation) the purposes described in the below paragraphs.

2. Monitoring use of our Sites

Where, as part of our Site services, we enable you to post information or materials on our Site, we may access and monitor any information which you upload or input, including in any password-protected sections. Subject to any necessary consents, we also monitor and/or record the different Sites you visit and actions taken on those Sites, e.g. content viewed or searched for. If you are a registered user (e.g. a subscriber or taking a trial), when you log on, this places a cookie on your machine. This enables your access to content and services that

are not publicly available. Once you are logged on, the actions you take - for example, viewing an article - will be recorded (subject to any necessary consents). We may use technology or a service provider to do this for us. This information may be used for one or more of the following purposes:

to fulfil our obligations to you;

to improve the efficiency, quality and design of our Sites and services;

to see which articles, features and services are most read and used

to track compliance with our terms and conditions of use, e.g. to ensure that you are acting within the scope of your user licence;

for marketing purposes (subject to your rights to opt-in and opt-out of receiving certain marketing communications) - see paragraph 3 below;

for advertising purposes, although the information used for these purposes does not identify you personally. Please see paragraph 5 below for more details;

to protect or comply with our legal rights and obligations; and

to enable our journalists to contact and interact with you online in connection with any content you may post to our Sites.

Please see paragraph 5 below for more information on cookies and similar technologies and a link to a page where you can turn them on or off.

3. Marketing

Some of your personal data collected under paragraphs 1 and 2 above may be used by us to contact you by e-mail, telephone and/or post for sending information or promotional material on our products and/or services and/or those of our other group companies. We give you the opportunity to opt-out of receiving marketing communications. Further detail can be found on the applicable Site and in the footer of each marketing communication sent by us, our group companies or service providers. See also "Consents and opt-outs" section below. We will not share your information with third parties for marketing purposes.

4. Profiling

We may analyse your personal information to create a profile of your interests and preferences so that we can contact you with information relevant to you.

5. Cookies and similar technologies

All our Sites use cookies and similar technical tools to collect information about your access to the Site and the services we provide.

What is a cookie?

When you enter some sites, your computer will be issued with a cookie. Cookies are text files that identify your computer to servers. Cookies in themselves do not identify the individual user, just the computer used.

Many sites do this whenever a user visits their site in order to track traffic flows, recording those areas of the site that have been visited by the computer in question, and for how long.

Users have the opportunity to set their computers to accept all cookies, to notify them when a cookie is issued, or not to receive cookies at any time. Selecting not to receive means that certain personalised services Exporta Publishing & Events Ltd offers cannot then be provided to that user.

Why do we use cookies?

1. Log In - Where we provide log in mechanisms for site users a cookie is created at login and for the duration of the session. Each cookie contains a unique reference number only (no personal information) which is used to confirm you are authorised.

2. Analytics - To allow us to keep track of traffic to our website we use cookies. The cookies simply tell us if you have previously visited our website so we can get more accurate figures for New vs Returning visitors.

Find and control your cookies

All of the major browser providers offer advice on setting up and using the privacy and security functions for their products. If you require technical advice or support for a specific browser/version please contact the provider or visit their website for further details: www.microsoft.com / www.mozilla.com / www.apple.com / www.opera.com / www.aol.com / www.netscape.com / www.flock.com / www.google.com.

We may use cookies to:

remember that you have used the Site before; this means we can identify the number of unique visitors we receive to different parts of the Site. This allows us to make sure we have enough capacity for the number of users that we get and make sure that the Site runs fast enough

remember your login session so you can move from one page to another within the Site;

store your preferences or your user name and password so that you do not need to input these details every time you visit the Site;

customise elements of the layout and/or content of the pages of Site for you;

record activity on our Sites so that we understand how you use our Sites enabling us to better tailor our content, services and marketing to your needs;

collect statistical information about how you use the Site so that we can improve the Site; and

gather information about the pages on the Site that you visit, and other information about other websites that you visit, so as to place you in a "market segment". This information is only collected by reference to the IP address that you are using, but does include information about the county and city you are in, together with the name of your internet service provider.

Most web browsers automatically accept cookies but, if you prefer, you can change your browser to prevent that, or to notify you each time a cookie is set. You can also learn more about cookies in general by visiting www.allaboutcookies.org which includes additional useful information on cookies and how to block cookies using different types of browser. Please note however, that by blocking, deleting or turning off cookies used on the Site you may not be able to take full advantage of the Site.

6. E-mail tracking

E-mail tracking is a method for monitoring the e-mail delivery to those subscribers who have opted-in to receive marketing e-mails from GTR, including GTR Africa, GTR Asia, GTR Americas, GTR Europe, GTR Mena, GTR eNews, Third party e-mails and GTR Ventures.

Why do we track e-mails?

So that we can better understand our users' needs, we track responses, subscription behaviour and engagement to our e-mails - for example, to see which links are the most popular in newsletters. They enable us to understand the consumers journey through metrics including open rate, click-through rate, bounces and unsubscribes. Any other purposes for which Exporta Publishing & Events Ltd wishes to use your personal data will be notified to you and your personal data will not be used for any such purpose without obtaining your prior consent.

How do you track GTR eNewsletters?

To do this, we use pixel GIFs, also known as "pixel tags" - these are small image files that are placed within the body of our e-mail messages. When that image is downloaded from our web servers, the e-mail is recorded as being opened. By using some form of digitally time-stamped record to reveal the exact time and date that an e-mail was received or opened, as well the IP address of the recipient.

7. Consents and opt-outs

You can give your consent to opt-out of all or any particular uses of your data as indicated above by:

Indicating at the point on the relevant Site where personal data is collected

Informing us by e-mail, post or phone

Updating your preferences on the applicable Site or eNewsletter (unsubscribe and preference options are available in the footer of each eNewsletter)

To turn cookies and similar technologies on and off, see the information in paragraph 5 above. Any questions regarding consents and opt-outs should be sent by e-mail to privacy@gtreview.com or by writing to Data Protection Officer at, Exporta Publishing & Events Ltd, 4 Hillgate Place, London, SW12 9ER, United Kingdom. Alternatively, you can telephone our London headquarters at +44 (0) 20 8673 9666.

8. Disclosures

Information collected at one Site may be shared between Exporta Publishing & Events Ltd and other group companies for the purposes listed above.

We may transfer, sell or assign any of the information described in this policy to third parties as a result of a sale, merger, consolidation, change of control, transfer of assets or reorganisation of our business.

9. Public forums, message boards and blogs

Some of our Sites may have a message board, blogs or other facilities for user generated content available and users can participate in these facilities. Any information that is disclosed in these areas becomes public information and you should always be careful when deciding to disclose your personal information.

10. Data outside the EEA

Services on the Internet are accessible globally so collection and transmission of personal data is not always limited to one country. Exporta Publishing & Events Ltd may transfer your personal data, for the above-listed purposes to other third parties, which may be located outside the European Economic Area and/or with a different level of personal data protection. However, when conducting transfers, we take all necessary steps to ensure that your data is treated reasonably, securely and in accordance with this Privacy Statement.

Who has access to your information?

Confidentiality and Security of Your Personal Data

We are committed to keeping the data you provide us secure and will take reasonable precautions to protect your personal data from loss, misuse or alteration.

However, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our Site; any transmission is at your own risk. Once we have received your information, we will use strict procedures and security features described above to try to prevent unauthorised access.

We have implemented information security policies, rules and technical measures to protect the personal data that we have under our control from:

unauthorised access

improper use or disclosure

unauthorised modification

unlawful destruction or accidental loss

All our employees, contractors and data processors (i.e. those who process your personal data on our behalf, for the purposes listed above), who have access to, and are associated with the processing of your personal data, are obliged to keep the information confidential and not use it for any other purpose than to carry out the services they are performing for us.

Responsibilities

Everyone who works for or with Exporta Publishing & Events Ltd has some responsibility for ensuring data is collected, stored and handled appropriately. Each team handling personal data must ensure that it is handled and processed in line with this policy and data protection principles. However, the following people have key areas of responsibility. The board of directors is ultimately responsible for ensuring that Exporta Publishing & Events Ltd meets its legal obligations.
Name of Data Controller
The Data Controller is Exporta Publishing & Events Ltd. Exporta Publishing & Events Ltd is subject to the UK Data Protection Act 1998 and is registered in the UK with the Information Commissioner`s Office.

How to access, update and erase your personal information

If you wish to know whether we are keeping personal data about you, or if you have an enquiry about our privacy policy or your personal data held by us, in relation to any of the Sites, you can contact the Data Protection Officer via:

By writing to this address: Data Protection Officer, Exporta Publishing & Events Ltd, 4 Hillgate Place, London, SW12 9ER, UK

Telephone: +44 (0) 20 8673 9666

E-mail: privacy@gtreview.com

Upon request, we will provide you with a readable copy of the personal data which we keep about you. We may require proof of your identity and may charge a small fee (not exceeding the statutory maximum fee that can be charged) to cover administration and postage.

Exporta Publishing & Events Ltd allows you to challenge the data that we hold about you and, where appropriate in accordance with applicable laws, you may have your personal information:

Disclosing data for other reasons

In certain circumstances, the Data Protection Act allows personal data to be disclosed to law enforcement agencies without the consent of the data subject. Under these circumstances, Exporta Publishing & Events Ltd, will disclose requested data. However, the Data Controller will ensure the request is legitimate, seeking assistance from the board and from the company's legal advisors where necessary.

Changes to this Privacy Statement

We will occasionally update this Privacy Statement to reflect new legislation or industry practice, group company changes and customer feedback. We encourage you to review this Privacy Statement periodically to be informed of how we are protecting your personal data.

Providing information

Exporta Publishing & Events Ltd aims to ensure that individuals are aware that their data is being processed, and that they understand.

How the data is being used

How to exercise their rights

To this end, the company has a privacy statement, setting out how data relating to individuals is used by the company. This is available on request and available on the company's website.

Review of this policy

We keep this Policy under regular review. This Privacy Statement was last updated in April 2018.

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GCB Bank secures US$117mn trade finance facility

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Ghana's GCB Bank has raised a US$117mn syndicated trade finance facility from a group of eight lenders. The facility, disbursed in early February, was oversubscribed by more than double its initial launch amount of US$50mn. London-based alternative trade finance, Africa Trade Finance, is the bookrunner and co-ordinator of the facility, while First Abu Dhabi Bank ...

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KUALA LUMPUR: Alliance Bank Malaysia Bhd has been named "Best Trade Finance Bank in Malaysia" by Global Banking & Finance.

In addition, the bank's BizSmart eTrade solution clinched the "Most Innovative Trade Finance Banking Product in Malaysia."

In a statement today, Alliance Bank said the BizSmart eTrade, launched in September 2020, offered business owners the ease to manage their business financials on-the-go with easy access to their account details, submit and check multiple applications as well as approve multiple applications via the BizSmart Mobile App.

According to the bank, it was the first bank to allow bankers' acceptance or trust receipts application via mobile phones.

It said the mobile app had garnered nearly 30 per cent of the bank's monthly trade transactions by December 2020.

Group chief executive officer Joel Kornreich said BizSmart eTrade platform allowed digital submission of the business owners' trade financing applications without being physically present at the bank.

"The approved trade proceeds will be credited into the customer's account within 24 hours of approval. This saves our customers time so they can focus on their business' success," he said.

Other digital innovations by Alliance Bank include Digital SME Lending that offers a simple, convenient, fast, and paperless solution for customers to apply for financing online and one-stop community platform BizSmart Solution that enables business owners to connect, obtain relevant solutions, expand market reach and acquire training to upskill themselves and their employees. - Bernama

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Alliance Bank named Malaysia's Best Trade Finance Bank

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KUALA LUMPUR: Alliance Bank Malaysia Bhd has been named "Best Trade Finance Bank in Malaysia" by Global Banking & Finance. In addition, the bank's BizSmart eTrade solution clinched the "Most Innovative Trade Finance Banking Product in Malaysia."

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Based on Ripple vs. SWIFT: Transforming Cross Border Remittance Using Blockchain Technology article, I get to know more about swift. Nowadays blockchain technology is transforming traditional financial systems. Cross-border money remittance industry is in a crossroad being challenged. The traditional SWIFT system is facing newcomers like Ripple system which is based on the blockchain distributed ledger technology with its own crypto tokens. This article conducts a SWOT analysis on both technologies to find out whether the blockchain technology has the potential to transform a traditional industry and how this may be possible. SWIFT still take the lead in the remittance market due to the economy of scale. However, in long-term, emerging technology like Ripple will eventually revolutionize the remittance industry or even other financial systems.

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Blockchain technology is transforming traditional financial systems. Cross-border money remittance industry is in a crossroad being challenged. The traditional SWIFT system is facing new comers like Ripple system which is based on the blockchain distributed ledger technology with its own crypto tokens. This paper conducts a SWOT analysis on both technologies to find out whether the blockchain technology has the potential to transform a traditional industry and how this may be possible. We conclude that Ripple has all of the advantages over SWIFT despite some minor issues. In short-term, SWIFT will still take the lead in the remittance market due to the economy of scale. However, in long-term, emerging technology like Ripple will eventually revolutionize the remittance industry or even other financial systems.

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July 2009 · Journal of Peasant Studies

The World Development Report 2008 uses Indonesia as an illustrative case for what it calls 'transforming countries'. The main argument of this paper is that the three pathways out of poverty (commercially-oriented entrepreneurial smallholder farming; rural non-farm enterprise development, and out-migration) prescribed by the Report should be theoretically and empirically questioned because of the ... [Show full abstract]

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Blockchain is one of the most important technical invention in the recent years. Blockchain is a transparent money exchange system that has transformed the way a business is conducted. Companies and tech giants have started investing significantly in the blockchain market and it is expected to be net worth of more than 3 trillion dollars in next 5 years. It has become growing popular because of ... [Show full abstract]

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Models and algorithms for effective decision-making in a data-driven environment are discussed. To enhance the quality of the extracted knowledge and decision-making, the data sets are transformed, the knowledge is extracted with multiple algorithms, the impact of the decisions on the modeled process is simulated, and the parameters optimizing process performance are recommended.

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(PDF) Ripple vs. SWIFT: Transforming Cross Border Remittance Using Blockchain Technology

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Blockchain technology is transforming traditional financial systems. Cross-border money remittance industry is in a crossroad being challenged. The traditional SWIFT system is facing new comers like Ripple system which is based on the blockchain distributed ledger technology with its own crypto tokens.

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https://www.livemint.com/industry/banking/union-bank-of-india-launches-cross-border-trade-finance-service-trade-nxt-11652353620114.html

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Union Bank of India has launched Trade nxt, a cross border trade finance service for Indian exporters and importers.

The platform will enable enterprises to conduct all export/import transactions, including entry and processing of letters of credit, bank guarantees, export/import bills, disbursement of export credit, outward and inward remittances and dealer financing, among other things, at one place.

‘Trade nxt’ eliminates the need for companies to visit a bank branch to initiate a trade transaction and ensures better governance with enhanced security and controls, the bank said in its statement.

The platform will also enable regulatory online auto reporting through import Data Processing & Monitoring System (IDPMS), Export Data Processing & Monitoring System (EDPMS) and other statutory reporting pertaining to ODI/ FDI/ LRS transactions.

To provide a user-friendly experience, Union Bank said the platform has customised dashboards, OCR based transactions, artificial intelligence, bulk uploads, with additional features like customised MIS/ reports.

Key features of the platform include digital transactions round the clock and from anywhere, with minimal dependency on the branch, auto-generated regulatory declarations, reminders for future bills and payments due dates, dedicated relationship manager desk, digitised trade finance transactions Facility of uploading scanned copies of documents is available, wherever applicable.

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Union Bank of India launches cross border trade finance service Trade Nxt

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The platform will enable enterprises to conduct all export/import transactions, including entry and processing of letters of credit, bank guarantees, export/import bills, disbursement of export credit, outward and inward remittances and dealer financing, among other things

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https://www.wyoleg.gov/InterimCommittee/2019/S3-20190506TokenizationArticle.pdf

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https://read.oecd-ilibrary.org/view/?ref=1069_1069990-1vpmnuxu1s&title=Trade-Finance-in-the-COVID-era-Current-and-future-challenges

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Current View

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gift city: 8 International Banks Set Up Offices At Gift City | Ahmedabad News - Times of India

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A Japanese lender, MUFG Bank, has received approval to open a branch at the Gujarat International Financial Tec (GIFT) City for foreign currency-deno

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https://technode.global/2022/05/25/singapores-funding-societies-expands-financing-offerings-for-msmes-via-islamic-fintech-facilities/

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Funding Societies, the Singapore-based small and medium-sized enterprise (SME) digital financing platform, on Wednesday introduced its Shariah-compliant trade financing solutions based on Commodity Murabahah (Tawarruq) for creditworthy and underserved Malaysian micro, small, and medium enterprises (MSMEs) seeking to grow their business or expand their working capital as the country reopens its economic sectors and transitions to an endemic phase.

Funding Societies Malaysia Co-Founder and Chief Executive Officer Wong Kah Meng said in a statement that despite their encouraging business performance, MSMEs have limited access to financing and are underserved for various reasons (some of the main factors include low to zero credit track record, lack of assets to pledge, and lack of financial documents for credit assessment).

"This trend was further exacerbated during COVID-19. Due to social distancing norms and limitations in meeting customers face to face, it became difficult for traditional financial institutions to provide loans to SMEs, notwithstanding stricter requirements in certain industries or products due to heightened risk," he added.

He also said that during the pandemic, he observed many enterprising Malaysians have taken to digital platforms and marketspaces to start, sustain or even expand their business.

"This can be seen from the increase in search traffic and number of SMEs we have onboarded through digital channels across both digital and offline economies," he added.

According to the statement, MSMEs recognize the importance of utilizing FinTech and Islamic FinTech (iFintech) to gain access to capital to ensure continuous operationalization and expansion of their business activities. The introduction of Shariah-compliant financing complements Funding Societies' existing broad range of financing products to serve creditworthy SMEs of all segments, vintages, and sizes, including those operating in the Halal industry.

Furthermore, iFintech is growing briskly amidst concerns of global economic slowdown following general sluggish markets and cautious consumer sentiments in the United States as well as Southeast Asian economies like Malaysia and Singapore.

In 2021, the Malaysian iFinTech market was estimated to be valued at $3 billion. Malaysia is categorized as a "market leader" on the iFinTech Hubs Maturity Matrix with high growth and a high conduciveness. The country comes first on the Global Islamic FinTech (GIFT) Index.

"This represents an encouraging opportunity for both SMEs and investors. The gradual pick-up in economic activities and reopened borders coupled with anticipated elevated consumer confidence would translate into a more optimistic outlook as a whole. However, we need to maintain a cautious approach as various markets have raised interest rates in an attempt to rein in inflationary pressures, risking an economic slowdown," Wong said.

In ensuring compliance with Shariah principles, Funding Societies partners with Masryef Advisory, a registered Shariah advisory company with the Securities Commission as its Shariah advisor.

"Funding Societies took a great step to also offer Shariah-compliant products that benefit both Muslims and non-Muslims investors to invest in its platform. In addition, the underserved MSMEs can now have greater access to Islamic financing through the platform. We are proud to be part of Funding Societies' journey into Islamic financing. Funding Societies has obtained Shariah-compliant certificate from Masryef which would enable them to also offer Islamic financing solutions to the users," said Khairil Anuar Mohd Noor, Principal at Masryef Advisory.

Funding Societies' Shariah-compliant trade financing solutions enable Malaysian MSMEs who have been operating for at least a year to access zero collateral financing and a credit line of up to MYR1 million ($227,531).

Funding Societies | Modalku is the largest SME digital financing platform in Southeast Asia. It is licensed in Singapore, Indonesia, and Thailand, registered in Malaysia, and operates in Vietnam.

The FinTech startup is backed by SoftBank Vision Fund 2, SoftBank Ventures Asia, Sequoia Capital India, Alpha JWC Ventures, SMBC Bank, Samsung Ventures, BRI Ventures, Endeavor, SGInnovate, Qualgro, and Golden Gate Ventures amongst others.

The FinTech company provides business financing to SMEs, which is funded by individual and institutional investors. In seven years, it has helped finance over five million business deals with over MY9.5 billion ($2.16 billion) in funding.

Masryef Advisory Sdn. Bhd. is a registered Shariah Advisory firm under Securities Commission Malaysia (SC) and a partner of Malaysia Digital Economic Corporation (MDEC). The firm has been offering consultancy and advisory services to over 30 clients for the past three years standing by over than 50 years of experienced founders and consultants.

Parallel to Malaysia's aspiration as a leading global Islamic finance hub, Masryef has worked together with regulators, experts in the field and industry players. Masryef as a boutique advisory firm focused on Islamic FinTech and has been partner with most of the peer to peer (P2P), equity crowdfunding platform (ECF) and buy now pay later (BNPL) players.

Singapore's Funding Societies steps into Vietnam in fifth market expansion

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Singapore's Funding Societies expands financing offerings for MSMEs via Islamic FinTech facilities - TechNode Global

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Funding Societies, the Singapore-based small and medium-sized enterprise (SME) digital financing platform, on Wednesday introduced its Shariah-compliant trade financing solutions based on Commodity Murabahah (Tawarruq) for creditworthy and underserved Malaysian micro, small, and medium enterprises (MSMEs) seeking to grow their business or expand their working capital as the country reopens its economic sectors and transitions to an endemic phase.

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https://ecdpm.org/great-insights/multiple-dimensions-trade-development-nexus/trade-financing-facilities-counter-cyclical-role-current-global-context/

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Alvarez, A.M. 2013. Trade-financing facilities: A counter-cyclical role in the current global context?. GREAT Insights, Volume 2, Issue 8. November 2013. Maastricht: ECDPM.
There have been several efforts from the international community to counteract the effects of the global financial crisis; firms operating in developing countries, which rely heavily on trade finance to support exports and imports, still face the lack of finance necessary to cover their financing needs. This situation hinders them to maintain their production and trade activities. The trade finance formula
How does trade finance support production of goods and services from developing countries? Trade finance refers to methods and instruments designed to support importers and exporters through the trade cycle. Exporters extend credit to importers until they pay, and at the same time, they need to finance their own import and purchase of raw materials and production to support their export sales. The transaction encompasses a circuit where firms extend credit and secure financing to customers and simultaneously receive credit from their suppliers. On both sides the transaction involves the risk of non-payment and therefore, can generate shocks.

Trade financing involves a wide array of instruments, structures and mechanisms, depending on the parties to the transaction, the sector, country of destination, term and conditions of the contracts, etc. Generally, the most important issues behind trade financing are financing the cash-to-cash cycle of the exporter and importer, as mentioned above, and risk mitigation needs related to the importer and/or the importer´s country (country risk and commercial risk). The general premise is that exporters want to accelerate their cash-to-cash cycle, thus seeking shorter tenors as well as lower as much as possible the risk profile of a trade transaction, and importers need to extend the payment tenors.
A bipolar world of access to trade financing
Large corporations, retailers and traders, at the helm of the global supply chains (GVCs), have succeeded in building a strong network of banks over the years and therefore have excellent access to a wide variety of financing structures and channels, which protect them even in times of crisis. Unfortunately the majority of the small and medium size enterprises (SMEs), mostly in the least developed countries (LDCs), are in the opposite situation. Besides being weaker financially wise and in higher risk countries, they lack the necessary formation and information of available trade financing products. To make it worse, the potential volumes are small as compared to the first group, therefore lacking the necessary leverage to insure access to banks and trade financing lines with interesting tenors and products. Hence the GVCs and related financing are dominated by large corporations and their network of banks with very little inclusion of SMEs which, when included, are obliged to accept difficult trading conditions with long repayment tenors when exporting or short payment terms when importing, all of this under very limited financing access.
Accessing international value chains through trade financing
The intermediation of financial institutions is therefore needed because of the opposite necessities on both sides of a trade transaction. Trade financing structures and products allow the parties in a transaction to maximise their working capital cycles, and also mitigate the risks involved in a transaction, shifting the risk away from the trading partners to a financial institution. To achieve that purpose there is a diversity of financial agents, from private and government owned banks, ExImbanks and DFIs, to trade financing funds, among others.
The role of government owned and multilateral trade financing agents
A number of multilateral development banks have played a key role in ensuring trade financing flows in the post-financial crisis period. This has been translated into an expansion of trade-finance facilitation programmes by these institutions. In this regard, the G-20 Summit's Initiative (2009) was useful to mobilise additional short-term finance and guarantees to support trade. The role played by the Trade Finance Facilitation Programs of institutions such as the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter American Bank, the Islamic Development Bank, and the World Bank, have been widely recognised. These institutions have been supporting the Aid for Trade (AfT) Initiative launched in Hong Kong in 2005.

There are also a number of development finance institutions (DFIs) and ExImbanks from developing countries and emerging economies focusing on supporting trade in goods and services, including through GVCs; increasing the internationalisation of SMEs and its integration into GVCs, and developing infrastructure projects (energy, transports, communications), among other domains. Given that their membership is composed almost exclusively by developing countries and emerging economies, DFIs and ExImbanks can assess better the needs and priorities at country and regional level, and this may also give a signal to enhance the institutions, including an increase in resource allocation. Some of these institutions also follow solidarity and regional integration as a guiding principle for their cooperation initiative, and embrace socially inclusive goals. This is, for example, the goal of the proposed Bank of the South and the Bank of the Bolivarian Alliance for the Peoples of Our Americas ( Spanish : Alianza Bolivariana para los Pueblos de Nuestra América, or ALBA).

Support from DFIs and ExImbanks to trade in goods and services of developing countries, particularly LDCs, and emerging economies is required in every phase of the production process; this becomes crucial when firms from these countries, and particularly SMEs, wish to join GVCs.

In Latin America and the Caribbean, the Development Bank of Latin America's (CAF) strongly support to the development of the vital physical infrastructure and the processes of integration and international competitiveness of the region, especially aimed at the areas of roads, energy and telecommunications among others. The Brazilian Development Bank (BNDES) is an example of an institution that is committed to national development but also increasingly guided by an internationalisation strategy. BNDES-exim provides Brazilian producers of goods and services with an important source of financing for trading with the rest of the world. Among its efforts, the increasing support of Brazilian companies trading in South America has been emphasised, in response to their strategy to strengthen commercial and financial ties across the continent. The Brazilian Export Financing Program (PROEX), which is managed by the Banco do Brasil , supports Brazilian exports of goods and services, especially by SMEs. The Central American Bank for Economic Integration (CABEI/BCEI) and the Foreign Trade Bank for Latin America (BLADEX) have noticeably gained high credit standing in the international community. CABEI has undertaken initiatives that promote intermediated credit to SMEs and has become the main regional provider of funding to the sector in Central America. It began with intermediated financing of microcredits and has gradually expanded its scope of action through other activities. BLADEX specialises in providing trade financing for the entire region, from Argentina to México and the Caribbean. It is a supranational bank originally established by the central banks of Latin American and Caribbean (LAC) countries to promote trade finance in the region and is also listed in the New York Stock Exchange (NYSE). The Latin American Association of Development Financing Institutions (ALIDE) has played a key role in promoting joint actions and coordinated participation of development banks and financial institutions focusing on Latin America and the Caribbean's socioeconomic progress and promotes exchange of experience with institutions from other regions.

The African Export Import Bank, whose goal is to stimulate a consistent expansion, diversification and development of African trade, has recently been awarded for its work in support of Africa's SMEs. The Nigerian Export Import Bank (NEXIM) aims to promote the diversification of the Nigerian economy and develop the external sector through the provision of services in support of non-oil exports, which includes the creative industry. NEXIM and the ExIm Bank of India have been cooperating in this field: a number of trade financing and infrastructure financing initiatives were introduced by the Export-Import Bank of India, including specific programs to support micro and SMEs. The latter has been awarded recognition from the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP) for its unique financing programme targeting the export-oriented Indian creative industry, which includes financing individual entrepreneurs, establishing infrastructure facilities for the creative industry and providing capacity building, reinforcing and promoting creative entrepreneurship .

Trade finance support is driven by the two main policy institutions in China, namely the China Development Bank (CDB) and the Ex-Im Bank of China. As an example of the type of negotiation that China is undertaking, it is possible to cite the CDB's infrastructure-related bilateral arrangements signed with selected countries linked to petroleum projects. Furthermore, the Korean Ex-Im Bank (KEXIM) has also been quite active in promoting South-South cooperation and the Türk ExImbank has partnered with the Nigerian ExImbank (NEXIM) to support activities in the non-oil Nigerian sector. ExImBank Malaysia, a government-owned development financial institution , provides a diverse range of products and services to Malaysian exporters; and the Philippines Export Credit Agency (Philguarantee), provides export loans and guarantees.
Constructing a new global financial architecture (suggested sub-heading)
As part of their long-term view to promote stable economic growth and help local firms to obtain cheap funding, cooperation initiatives among DFIs and ExImbanks have included the extension of lines of credits, exchange of staff, promotion of joint projects, among others. The Global Network of DFIs and ExImbanks (G-NEXID), composed of 24-members, aims to promote global trade and investment flows, especially between developing countries, within the framework of South-South cooperation. The Network was established in 2006 at the hands of the Secretary General of UNCTAD and is currently chaired by BLADEX.

More information on the role of development banks is included in the discussion paper DP152, Trade Finance Opportunities through South-South Cooperation, which can be found at www.ecdpm.org/dp152. The paper shows the need to strengthen national and regional institutions and financing trade of goods and services including through GVCs. It also praises the importance of coordinating activities and coming up with common policies to improve the conditions for and availability of trade financing. Some examples of cooperation initiatives such as G-NEXID, the Berne Union, the Prague Union, the International Development Finance Club (IDFC), the Amman Union, the Asian ExIm Banks Forum, ADFIAP, ALIDE and the proposed Brazil Russia India China South Africa (BRICS). Development Bank illustrate effective cooperation between institutions that adhere to different ideologies, face different levels of development and/or are geographically distant.

Setting up national development banks and/or ExImbanks requires a significant effort as well as bold decision making by governments, including the status of the institution, the most appropriate models of export credit, insurance and guarantee institutions that should be used as a reference, and the services that could be provided.

Nevertheless, given the rapid changes in the conditions and requirements of trade in today´s world, the dominance of open account terms of trade, accounting for more than 80% of the trade transactions, and the need for speed and efficiency, ExImbanks and DFIs traditionally specialised in mid to long term financing products, have an urgent task to adapt by reducing the lengthy processes and cumbersome paperwork, as well as increasing the range of short term financing, structures and risk mitigation products.

South-South cooperation is at the forefront of the debate on international economic development. Accordingly, the ways in which trade financing supports trade in goods and services and cooperation should be a major topic of debate and analysis in exploring joint work programs between development banks and ExImbanks. The existing partnership between UNCTAD and G-NEXID provides a useful means to facilitate such cooperation.

The impact of trade finance programmes in every stage of the production process, and particularly in the process of integrating national, regional and global value chains, deserves particular emphasis and involves different economic actors. Strengthening trade finance institutions should therefore be part of any post-financial crisis reform.
Ana María Alvarez is an Economic Affairs Officer atUNCTAD. The opinions expressed in this paper are those of the author and do not necessarily reflect the views of UNCTAD nor those of other experts or institutions that are mentioned therein.
This article was published in GREAT Insights Volume 2, Issue 8 (November 2013).

Economic recovery and transformation Trade

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Trade-Financing Facilities: Role in the Current Global Context? -ECDPM

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There have been several efforts from the international community to counteract the effects of the global financial crisis; firms operating in developing countries, which rely heavily on trade finance to support exports and imports, still face the lack of finance necessary to cover their financing needs.

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HSBC Amanah completes first-ever green trade financing facility for sustainable cocoa sourcing in Malaysia

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KUALA LUMPUR (July 12): HSBC Amanah Malaysia has completed the first-ever bespoke green trade financing facility for sustainable cocoa sourcing in Malaysia.

In a statement today, HSCB Amanah said it had completed the bespoke financing facility to Guan Chong Bhd's unit Guan Chong Cocoa Manufacturer Sdn Bhd.

According to the bank, the green financing supports Guan Chong's sustainable ambition to achieve 100% traceable and sustainable cocoa by 2030 from its direct cocoa bean sourcing network.

The structure of the financing blends various post-shipment solutions for sustainable sourcing that can be clearly assessed, quantified, measured and reported.

Through trade documents, the procurement of certified cocoa beans by Guan Chong - using sustainable sources - was attested to be in compliance with the environmental, social and/or economic aspects by recognised certification bodies, HSBC Amanah added.

At the same time, the deal was also in compliance with Green Loan Principles (GLP), which is a framework that promotes the development and integrity of green finance products, it noted.

"We are honoured to partner and support GCB in their commitment for a more responsible supply chain. The deal enables GCB (Guan Chong) to procure certified cocoa beans which supports agroforestry systems and ensures no cocoa-related deforestation. This milestone transaction marks the first green trade financing for sustainable cocoa sourcing in Malaysia as well as for HSBC Group," said HSBC Malaysia chief executive officer Stuart Milne.

Guan Chong spokesperson Elsa Tay added that the group's vision is to move towards sustainable practices that are mutually beneficial for both its customers and its business.

"... HSBC's support will help in GCB's transition to achieve our ambitious yet necessary target of 100% Traceable and Sustainable cocoa by 2030 from direct supply chain," she said.

Guan Chong is the world's fourth-largest cocoa grinder and has a long-term vision of building a sustainable business that aims to positively impact the cocoa supply chain through its sustainability programme, Good Cocoa & Beyond, and its four pillars.

This includes improving farmer incomes, protecting the environment, benefitting the farmers and their communities, and providing responsible cocoa, the statement read.

Shares in Guan Chong were trading 2.62% or seven sen higher at RM2.74 at the time of writing. This translates into a market capitalisation of RM2.85 billion.

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HSBC Amanah completes first-ever green trade financing facility for sustainable cocoa sourcing in Malaysia

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HSBC Amanah Malaysia has completed the first-ever bespoke green trade financing facility for sustainable cocoa sourcing in Malaysia. In a statement today, HSCB Amanah said it had completed the bespoke financing facility to Guan Chong Bhd's unit Guan Chong Cocoa Manufacturer Sdn Bhd.

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SWIFT, the global provider of financial messaging services, is looking at tests to link various central bank digital currency (CBDC) networks for cross-border transactions, a report said Saturday.

SWIFT has tapped Capgemini, the French information technology services and consulting company, to help with this.

According to SWIFT, the blind spot for CBDCs might be that they aren't designed for cross-border purposes, but mostly for domestic means.

The partnership with Capgemini will help SWIFT focus on specific use cases, including "CBDC to CBDC, fiat to CBDC, and CBDC to fiat."

SWIFT head of innovation Nick Kerigan said CBDCs are likely to be looked at as a "new form" of fiat currencies. He said there would be new platforms cropping up to parallel the old traditional payment system.

According to Thomas Zschach, SWIFT CIO, CBDCs should work together to make payments more frictionless.

"Facilitating interoperability and interlinking between different CBDCs being developed around the world will be critical if we are to fully realize their potential. Today, the global CBDC ecosystem risks becoming fragmented with numerous central banks developing their own digital currencies based on different technologies, standards and protocols."

See also: Cross-Border Real-Time Payments Pilot Launched by EBA, SWIFT, TCH

SWIFT worked with EBA Clearing and The Clearing House on a new pilot program for immediate cross-border (IXB) payments, a PYMNTS report said, which is likely to roll out a product by the end of 2022.

The product will be introduced in phases and will accommodate 24 financial institutions.

The three firms are developing this pilot to help out with enabling faster, smoother global money transfers, tapping options available in domestic payments.

Russ Waterhouse, executive vice president for product development and strategy at TCH, said the goal was to get "a better cross-border experience with a very short time to market."

"The trans-Atlantic pilot service will provide valuable input for the development of a fully fledged IXB service to meet customer expectations across the globe," he said.

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SWIFT to Test CBDC Cross-Border Payments Use

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SWIFT, the global provider of financial messaging services, is looking at tests to link various central bank digital currency (CBDC) networks for cross-border transactions, a report said Saturday. SWIFT has tapped Capgemini, the French information technology services and consulting company, to help with this.

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SWIFT for Electronic Funds Transfers

Need to transfer money overseas? Today, it is easy to walk into a bank and transfer money anywhere around the globe, but how does this happen? Behind most international money and security transfers is the Society for Worldwide Interbank Financial Telecommunications (SWIFT) system. SWIFT is a vast messaging network banks and other financial institutions use to quickly, accurately, and securely send and receive information, such as money transfer instructions.

More than 11,000 global SWIFT member institutions sent an average of 42 million messages per day through the network in 2021, marking an increase of 11.4% over 2020.

In this article, we explore what SWIFT does, how it works, and how it makes money.

Inside a SWIFT Transaction

SWIFT is a messaging network that financial institutions use to securely transmit information and instructions through a standardized system of codes. Although SWIFT has become a crucial part of global financial infrastructure, it is not a financial institution itself: SWIFT does not hold or transfer assets. Rather, its utility lies in its power to facilitate secure, efficient communication between member institutions.

SWIFT assigns each financial organization a unique code that has either eight characters or 11 characters. The code is interchangeably called the bank identifier code (BIC), SWIFT code, SWIFT ID, or ISO 9362 code. To understand how the code is assigned, let's look at Italian bank UniCredit Banca, headquartered in Milan. It has the eight-character SWIFT code UNCRITMM.

First four characters: the institute code (UNCR for UniCredit Banca)

Next two characters: the country code (IT for the country Italy)

Next two characters: the location/city code (MM for Milan)

Last three characters: optional, but organizations use them to assign codes to individual branches.

Let's assume a Bank of America Corp. ( BAC) branch customer in New York wants to send money to their friend who banks at the UniCredit Banca branch in Venice. The New York customer can walk into their Bank of America branch with their friend's account number and UniCredit Banca's unique SWIFT code for its Venice branch.

Bank of America will send a payment transfer SWIFT message to the UniCredit Banca branch over the secure SWIFT network. When Unicredit Banca receives the SWIFT message about the incoming payment, it will clear and credit the money to the Italian friend's account.

As powerful as SWIFT is, keep in mind that it is only a messaging system. SWIFT does not hold any funds or securities, nor does it manage client accounts.

The World Before SWIFT

Prior to SWIFT, telex was the only available means of message confirmation for international funds transfer. Telex was hampered by low speed, security concerns, and a free message format. In other words, Telex did not have a unified system of codes like SWIFT to name banks and describe transactions. Telex senders had to describe every transaction in sentences that were then interpreted and executed by the receiver. This led to many human errors, as well as slower processing times.

To circumvent these problems, the SWIFT system was formed in 1973. Six major international banks formed a cooperative society to operate a global network that would transfer financial messages in a secure and timely manner.

Why Is SWIFT Dominant?

According to the London School of Economics, "Support for a shared network...began to achieve institutional form...in the late 1960s, when the Société Financière Européenne (SFE, a consortium of six major banks based in Luxembourg and Paris), initiated a 'message-switching project.'"

SWIFT was then founded in 1973 with 239 banks in 15 countries. By 1977, it expanded to 518 institutions in 22 countries. In 2022, there were more than 11,000 institutional members hailing from more than 200 countries and territories.

Although there are other message services like Fedwire, Ripple, and Clearing House Interbank Payments System (CHIPS), SWIFT continues to retain its dominant position in the market. Its success may be attributed to how it continually adds new message codes to transmit different financial transactions and to the security of its platform.

Though SWIFT primarily started for simple payment instructions, it now sends messages for a wide variety of actions, including security transactions, treasury transactions, trade transactions, and system transactions. In Swift's latest report, from January 2022, data showed 44.5% of SWIFT traffic is still for payment-based messages, while 50.6% represents security transactions, and the remaining traffic flows to Treasury, trade, and system transactions.

Who Uses SWIFT?

In the beginning, SWIFT founders designed the network to facilitate communication about Treasury and correspondent transactions only. The robustness of the message format design allowed for the huge scalability through which SWIFT gradually expanded to provide services to the following:

Banks

Brokerage institutes and trading houses

Securities dealers

Asset management companies

Clearinghouses

Depositories

Exchanges

Corporate business houses

Treasury market participants and service providers

Foreign exchange and money brokers

Services SWIFT Offers

The SWIFT system offers many services that assist businesses and individuals to complete seamless and accurate business transactions. Some of the services offered are listed below.

Applications

SWIFT connections enable access to a variety of applications, which include real-time instruction matching for treasury and forex transactions, banking market infrastructure for processing payment instructions between banks, and securities market infrastructure for processing clearing and settlement instructions for payments, securities, forex, and derivatives transactions.

Business intelligence

SWIFT has recently introduced dashboards and reporting utilities that enable its clients to get a dynamic, real-time view of monitoring the messages, activity, trade flow, and reporting. The reports enable filtering based on region, country, message types, and related parameters.

Compliance services

Aimed at services around financial crime compliance, SWIFT offers reporting and utilities for Know Your Customer (KYC), sanctions, and anti-money laundering (AML).

Messaging, connectivity, and software solutions

The core of the SWIFT business resides in providing a secure, reliable, and scalable network for the smooth movement of messages. Through its various messaging hubs, software, and network connections, SWIFT offers multiple products and services that enable its end clients to send and receive transactional messages.

How Does SWIFT Make Money?

SWIFT is a cooperative organization owned by its members. Members are categorized into classes based on share ownership. All members pay a one-time joining fee plus annual support charges that vary by member classes.

SWIFT also charges users for each message based on message type and length. These charges also vary depending upon the bank's usage volume; different charge tiers exist for banks that generate different volumes of messages.

In addition, SWIFT has launched additional services as described above. These are backed by the long history of data maintained by SWIFT. These include business intelligence, reference data, and compliance services and offer SWIFT other income streams.

Challenges for SWIFT

The majority of SWIFT clients process huge transactional volumes for which manual entry of instructions is not practical. The need for the automation of SWIFT message creation, processing, and transmission is growing. However, this comes at a cost and increased operational overhead.

Although SWIFT has been successful in providing software for automation, that too comes at a cost. SWIFT may need to tap into these problem areas for the majority of its client base. Automated solutions within this space may bring in a new stream of income for SWIFT and keep clients engaged in the long run.

SWIFT and Sanctions

Because of their reliance on SWIFT to conduct fast, seamless, secure communication, countries around the world have an incentive to remain in good standing with the organization. SWIFT is overseen by central banks from Group of Ten (G10) countries, but it is a neutral organization operating for the benefit of all of its members.

In recent years, the possible use of SWIFT membership as a potential sanction against members has emerged multiple times. In 2012, for example, the European Union passed a sanction against Iran that compelled SWIFT to disconnect sanctioned Iranian banks. And in 2022, leaders from the U.K., EU, U.S., and Canada announced selected banks in Russia would be disconnected from SWIFT over its invasion of Ukraine.

In a nutshell, what is SWIFT?

Was Russia disconnected from SWIFT due to its invasion of Ukraine?

How important is SWIFT to global finance?

The Bottom Line

SWIFT has retained its dominant position in the global processing of transactional messages. It has recently forayed into other areas, such as offering reporting utilities and data for business intelligence, which indicates its willingness to remain innovative. In the short- to midterm, SWIFT seems poised to continue dominating the market.

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Need to transfer money overseas? Today, it is easy to walk into a bank and transfer money anywhere around the globe, but how does this happen? Behind most international money and security transfers is the Society for Worldwide Interbank Financial Telecommunications (SWIFT) system.

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https://news.bitcoin.com/swift-is-experimenting-with-decentralized-technologies-to-allow-cbdc-interconnection/

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SWIFT, the interbank payments protocol and messaging system, has announced it is working to connect the different central bank digital currency (CBDC) protocols in development today. The company has partnered with Capgemini, a digital services provider, making a series of experiments to ensure that the new set of CBDCs have cross-border payments and remittance capabilities.
SWIFT Set to Modernize Connection Systems

SWIFT, the bank and payments interconnection protocol, is working to bring its services to the upcoming group of central bank digital currencies. The member-owned cooperative has announced it is already running experiments with decentralized platforms to ensure that remittances and cross-border payments will be available for users of these currencies in the future.

To SWIFT, the interconnection of this new kind of currency will be pivotal for its success. While there are not many CBDCs operating currently, according to reports from the Bank of International Settlements, nine out of ten central banks are now exploring the possibilities of CBDCs, meaning that there is interest in the subject.

Nick Kerigan, Head of Innovation at SWIFT, remarked on the importance of this interconnection, stating:

Different systems and different CBDCs will need to be able to efficiently work together, or it will hamper the ability of businesses and consumers to make frictionless cross-border payments using CBDCs.

CBDC Experiments

The experiments that SWIFT is performing, in partnership with Capgemini, a digital services company, are testing the ability of these new currencies to be exchanged among different systems not designed to perform such functions.

While the inner workings of the system in place have not been explained to the public, SWIFT clarifies that part of the already existent payments infrastructure is being reused, including existing bank messaging standards and authentication models, ISO 20022, and SWIFT's private key infrastructure.

So far, the experiments, which use several decentralized ledger platforms, such as Corda and Quorum, show it could be possible to achieve the goals proposed. This would mean that CBDCs could coexist with traditional fiat currencies using SWIFT systems, in a transitional phase to total digitization.

SWIFT also hinted at the possibility of including other kinds of crypto assets in its network, as they become regulated at a global level.
What do you think about the CBDC experiments being performed by SWIFT? Tell us in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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SWIFT Is Experimenting With Decentralized Technologies to Allow CBDC Interconnection

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SWIFT, the interbank payments protocol and messaging system, has announced it is working to connect the different central bank digital currency (CBDC) protocols in development today. The company has partnered with Capgemini, a digital services provider, making a series of experiments to ensure that the new set of CBDCs have cross-border payments and remittance capabilities.

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The US and European Union (EU) have decided to partially exercise the nuclear-weapon option as far as economic sanctions are concerned: cutting off a number of Russian banks from the main international payment gateway, SWIFT. The assets of Russia's central bank are also expected to be frozen, constraining Moscow's ability to access its overseas reserves.

The intention of the moves is to "further isolate Russia from the international financial system", a joint statement stated.

These joint sanctions are the harshest measures against Moscow since its forces went into Ukraine and are expected to badly hit a country that is heavily reliant on the SWIFT platform for its key natural resources trade, especially the payments for its oil and gas exports. Cutting off a country from SWIFT in the financial world is equivalent to restricting Internet access of a nation.

Prior to this, only one country had been cut off from SWIFT - Iran. It resulted in it losing a third of its foreign trade. The move against Russia is only partly implemented for now, with only some Russian banks being covered. The option of expanding it further to a pan-country ban is something that the US and its allies are holding back as a further escalatory move.

What is SWIFT?

The SWIFT system stands for the Society for Worldwide Interbank Financial Telecommunication and is a secure platform for financial institutions to exchange information about global monetary transactions such as money transfers.

While SWIFT does not actually move money, it operates as a middleman to verify information of transactions by providing secure financial messaging services to more than 11,000 banks in over 200 countries. Based in Belgium, it is overseen by the central banks from eleven industrial countries: Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, Switzerland, the United Kingdom, and the United States, besides Belgium.

What does the move aim to achieve?

Excluding Russian banks from the SWIFT platform is expected to hit the country's economy hard - and in the words of the White House, it will make the country rely on "the telephone or a fax machine" to make payments.

According to former Russian Central Bank deputy chairman Sergei Aleksashenko: "There is going to be a catastrophe on the Russian currency market on Monday". Ursula von der Leyen, president of the European Commission, said the decision to paralyse the assets of Russia's central bank would stop the Kremlin from "using its war chest", referring to its forex reserves.

The banks affected are "all those already sanctioned by the international community, as well as other institutions, if necessary", a German spokesman was quoted as saying by the BBC. Targeting only some Russian banks seems to be aimed at both keeping the option of further escalation open, while ensuring that the sanctions have the maximum possible impact on Moscow, but prevent a major impact on European companies dealing with Russian banks for payments for their gas imports. Plus, the curbs on Russia's central bank will prevent it from dipping into its forex deposits to limit the effect of sanctions.

Moscow has been building up a cushion of foreign currency in the wake of the previous round of sanctions in 2014, with reserves touching a record high of $630 billion in January 2022. The new measures will significantly decrease the reserves available to the country's central bank, according to experts.

While workarounds to SWIFT have been tried, none have proven to be effective. During the last seven years, Russia, too, has worked on alternatives, including the SPFS (System for Transfer of Financial Messages) - an equivalent of the SWIFT financial transfer system developed by the Central Bank of Russia. The Russians are reported to be collaborating with the Chinese on a possible venture which will be a potential challenger to SWIFT.

It needs to be seen if Moscow can leverage this platform to some extent to get around the partial ban, which could soon be escalated to a complete one.

While it may take a while for the ban to make an impact, what is important is that they exhibit a strong resolve from Western nations. Responding to the latest economic sanctions, Ukraine's Prime Minister Denys Shmyhal termed them a "real help during this dark time".
Newsletter | Click to get the day's best explainers in your inbox

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Explained: What is SWIFT, and what shutting Russia out of it means

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The US and European Union (EU) have decided to partially exercise the nuclear-weapon option as far as economic sanctions are concerned: cutting off a number of Russian banks from the main international payment gateway, SWIFT. The assets of Russia's central bank are also expected to be frozen, constraining Moscow's ability to access its overseas reserves.

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https://www.wsj.com/articles/swift-banking-system-sanctions-biden-11645745909

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Russia's assault on Ukraine triggered a surge of calls for Western allies to completely sever Russia from the global financial system by disconnecting it from the Swift global financial messaging system.

The European Union was set Tuesday to instruct the Swift financial network to delist seven banks, including Russia's VTB Bank, Bank Rossiya and Bank Otkritie, according to several diplomats involved in discussions. The measure should be approved Tuesday evening although discussions were ongoing on whether any more banks should be immediately delisted.

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What Is Swift and Why Is It Being Used to Sanction Russia?

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Russia's assault on Ukraine triggered a surge of calls for Western allies to completely sever Russia from the global financial system by disconnecting it from the Swift global financial messaging system. The European Union was set Tuesday to instruct the Swift financial network to delist seven banks, including Russia's VTB Bank, Bank Rossiya and Bank Otkritie, according to several diplomats involved in discussions.

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SWIFT payments are a method of making an international money transfer sent by the SWIFT international payment network. SWIFT stands for 'Society for Worldwide Interbank Financial Telecommunication', and is the largest and most widely used financial messaging system in the world.

What is a SWIFT transfer?

A SWIFT transfer is otherwise known as an international money transfer, SWIFT is simply the dominant messaging system used to transfer money across the globe to recipients in different countries.

Founded in 1973, the SWIFT payment system consists of 11 thousand financial institutions, located in over 200 different countries worldwide and there are more than 35 million SWIFT transactions taking place every day. SWIFT has become the most dominant and standardised method for sending money to recipients in different countries safely, securely and relatively quickly.

What are SWIFT/BIC codes?

BIC stands for 'Bank Identifier Code' and are used when transferring money between bank accounts. A BIC Code (BIC number) is a unique address that identifies financial institutions involved in cross-border payments.

A SWIFT/BIC Code consists of eight to eleven characters (numbers and letters) which comprise the first three or all four of the following:

For example, the BIC code of ABN AMRO CAPITAL USA LLC is: FTSBUS33.

Also known as SWIFT-BIC, SWIFT ID or SWIFT code. BICs are standardised, allocated and managed by the SWIFT payment network. Each bank that is a member of SWIFT is assigned its own unique code and these are public information so can easily be found online on the bank's own website.

How long does a SWIFT transfer take?

SWIFT money transfers are by no means instant. It can take around one to four working days for your funds to reach the destination bank account, with the length of time varying based on the destination country, variations in time zones and differing banking processes. In addition to this, there are multiple checks in place for fraud and laundering which add to the length of time it takes to transfer funds.

If your bank doesn't have a direct relationship with the destination bank, the money will also have to go through an intermediary bank before it is passed to your recipient, again adding to the length of transfer time.

Are there any fees when using a SWIFT payment system?

There are two factors to consider when it comes to the fees involved in using the SWIFT payment system, the fees charged by your bank and the exchange rates. The overall costs are determined by your bank's fees and the exchange rates you agree to.

When making a SWIFT transfer, your bank is likely to charge a fee:

Transfer fees

Recipient fees

Correspondent fees (only if your money needs to go through an intermediary bank in transit)

Priority fees (only if you need your money to get there quicker)

Some examples of the fees charged by main UK banks are Lloyds charging £9.50 to transfer and £12 for recipients and HSBC charging £4 to transfer online or £9 in-branch and £8 for recipients.

The largest cost involved in carrying out SWIFT money transfers is the exchange rates, which vary depending on how much you're transferring and the current exchange rate at the time of sending your money. Most main banks charge around 3 to 5% for exchanging your money to the recipient's currency.

Benefit from our handy currency exchange tool to see how we can help you save on your international transfers.

How to transfer money using the SWIFT international payment system

You will need the following information:

Name of your recipient

Address of your recipient

Name and address of your recipient's bank

BIC code (otherwise called SWIFT code) of the destination bank

Account number or IBAN number of your recipient

The process of making a SWIFT transfer:

1. Anyone attempting to transfer money internationally will need their identity verified. To do this, your bank will usually request a photo of your passport and a recent bill to confirm your address.

2. You will then need to send your money to the bank you're using to transfer your funds.

3. The bank you are using to SWIFT transfer will send you a quote with their current exchange rate, which you can then choose to accept or not. Or, you can use an online currency exchange platform to benefit from the best exchange rates and smaller charges when sending large sums of money.

4. If you accept the exchange rate, it then becomes fixed and your money will be converted to the destination currency and sent using the SWIFT system to your destination bank account.

5. You're all done!

Start using CurrencyTransfer

To avoid losing out on large sums of money due to high exchange rates, start using our international bank transfer platform. We offer the best exchange rates on large transfers with a streamlined, simple and generally improved experience for carrying out global transactions.

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SWIFT transfers and Payment System | CurrencyTransfer

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SWIFT payments are a method of making an international money transfer sent by the SWIFT international payment network. SWIFT stands for 'Society for Worldwide Interbank Financial Telecommunication', and is the largest and most widely used financial messaging system in the world.

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Topline

As the U.S. and European Union respond to Russia's invasion of Ukraine with economic sanctions, cutting off the country's access to the international payment system SWIFT has been weighed as a possible "nuclear option"-here's what that would mean, and why Europe is hesitant to block Russia from using it.

Ukrainians living in Greece hold banners during a protest against the Russian invasion of Ukraine, ... [+]
Getty Images

Key Facts

SWIFT, which stands for the Society for Worldwide Interbank Financial Telecommunication, is based out of Belgium and handles payment requests and messages between 11,000 financial institutions across the world, delivering 42 million messages per day in 2021.

The Washington Post likens the system to the "Gmail of global banking," and the Financial Times notes that while Russia and other countries can still conduct banking transactions with other countries without SWIFT, it would be much more labor-intensive and expensive.

Cutting Russia off from SWIFT would have a significant economic impact: When the U.S. weighed booting Russia from the platform in 2014 due to its annexation of Crimea, former Russian finance minister Alexei Kudrin estimated Russia's gross domestic product would shrink 5% in a year without SWIFT, and then-Prime Minister Dmitry Medvedev likened the move to a "declaration of war."

The FT also notes the move would harm Russia's ability to profit off the oil and gas exports that make up 40% of the country's revenue.

Russia has established an alternative payments system and China also has its own system Russia could use, but the Atlantic Council notes both platforms are significantly smaller than SWIFT and wouldn't sufficiently offset the sting of being cut off.

Ejecting Russia from SWIFT would hurt the EU's ability to pay for the imports of Russian oil and gas it relies on, however, with one senior executive likening the move to the FT as "opening Pandora's box."

Crucial Quote

"I will not be diplomatic on this. Everyone who now doubts whether Russia should be banned from Swift has to understand that the blood of innocent Ukrainian men, women and children will be on their hands too," Ukrainian Minister of Foreign Affairs Dmytro Kuleba tweeted Thursday. "BAN RUSSIA FROM SWIFT."

Big Number

1.5%. That's the share of SWIFT transactions in 2020 that came from Russia, according to figures cited by the FT.

What We Don't Know

Whether Russia's access to SWIFT will actually get cut off. Some world leaders like U.K. Prime Minister Boris Johnson have urged for Russia to get booted from SWIFT, but Reuters reports EU officials are still "unlikely" to take that step at this stage given the potential ramifications. "You would create a big mess in Russia, but also for cross-border payment services," a senior executive at a foreign lender told the . "How would Europe pay their gas bill without SWIFT?" President Joe Biden said Thursday cutting Russia off from SWIFT remained an "option," but the U.S. was so far not taking that step because "right now that's not the position that the rest of Europe wishes to take."

Key Background

Russia invaded Ukraine early Thursday morning after weeks of speculation an attack was imminent, sparking widespread condemnation from officials around the globe. The U.S. and other foreign governments have so far chosen to respond to Russia's aggressions through economic sanctions, with Biden refusing to put American troops in Ukraine because doing so could spark "a world war." Countries including the U.S., U.K., Australia, Canada, Japan and the EU had already announced some sanctions, after Russian President Vladimir Putin paved the way for the attack Monday by formally recognizing the rebel states of Donetsk and Luhansk in eastern Ukraine. Biden issued his administration's "first tranche" of sanctions against Russia on Tuesday, which included the "full blocking" of two Russian banks from accessing Western financial markets and penalties aimed at "Russian elites and their family members," and then unveiled additional sanctions on Thursday.

Further Reading

Live: U.K. Bans Russian Airline, Announces 'Severe' Sanctions Against Russia (Forbes)

Russia Sanctions Tracker: 'First Barrage' Of Penalties Span Japan To U.S. (Forbes)

World leaders divided on whether to eject Russia from Swift payment system (Financial Times)

All About Swift, One Possible Path to Sanction Russia (Washington Post)

Will Russia be cut off from Swift if Moscow invades Ukraine? (Financial Times)

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What Is SWIFT? Here's How This Banking System Could Be Used To Punish Russia For Invading Ukraine

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As the U.S. and European Union respond to Russia's invasion of Ukraine with economic sanctions, cutting off the country's access to the international payment system SWIFT has been weighed as a possible "nuclear option"-here's what that would mean, and why Europe is hesitant to block Russia from using it.

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http://eprints.lse.ac.uk/33886/1/wp182.pdf

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SWIFT - The global provider of secure financial messaging services

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All of our systems and services are functioning as normal.

Staff in critical roles are working onsite as they have throughout the pandemic period to maintain the robustness of our services and systems. For other staff, SWIFT has begun a controlled and phased return to onsite working, prioritising, first and foremost, the safety and wellbeing of our teams and customers. We are closely monitoring actions of national and local authorities to determine when it is safe to open locations and are prepared to reverse openings when local situations warrant. We are not accepting visitors at offices that have reopened, and continue to have stringent travel restrictions in place.

We continue to actively engage with our community through forums including monthly digital Sibos sessions, webinars and our regular support channels. Customers can also access frequently asked questions in the SWIFT Knowledge Base (login required).

SWIFT's actions will continue to evolve based on the local situation and the advice of international and national authorities. We have strong business continuity place for all of our critical services with the ability to continue 24/7 operations in a crisis situation. We are ready to activate these plans if necessary.

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Statement on Covid-19 Precautions | SWIFT - The global provider of secure financial messaging services

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The Covid-19 pandemic continues to escalate around the world, impacting millions. SWIFT, like financial institutions, has put in place strong measures to protect the health and wellbeing of its employees and community while ensuring very robust business and operational continuity plans.

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BRUSSELS, March 2 (Reuters) - The European Union said on Wednesday it was excluding seven Russian banks from the SWIFT messaging system, but stopped short of including those handling energy payments, in the latest sanctions imposed on Russia over its invasion of Ukraine.

Russia's second-largest bank VTB (VTBR.MM), Bank Otkritie, Novikombank, Promsvyazbank (PSKBI.MM), Bank Rossiya, Sovcombank and VEB will each be given 10 days to wind-down their SWIFT operations, the EU said in its official journal. read more

SWIFT is the dominant messaging system underpinning global financial transactions and the EU, the United States, Britain and Canada moved on Saturday to block certain Russian banks from it, but had not said which would be hit. read more

The United States and Britain had been pushing for the SWIFT ban, but some in the euro zone had taken some persuading given the region's reliance on Russian energy exports.

SWIFT said in a statement that it would disconnect the seven Russian banks from their network on March 12, as required by EU regulations.

Removing Russian banks from SWIFT, a measure seen as drastic and unlikely only a week ago, is one of the most powerful tools Western authorities have used to punish Russia for what Moscow describes as a "special operation" in Ukraine.

A senior EU official said the banks were chosen based on their connections to the Russian state, with public banks already sanctioned after Russia's annexation of Crimea in 2014.

"All these banks that we have listed under SWIFT... they are all based on their connection to the state and the implicit connection to the war effort. We have not gone for a blanket ban across the whole banking system," the official said.

Sberbank (SBER.MM), Russia's largest lender, and Gazprombank were not included because they are the main channels for payments for Russian oil and gas, which EU countries are still buying despite the conflict in Ukraine.

The EU official added that these two Russian banks were nevertheless subject to other measures.

Officials have been concerned about disrupting energy flows to Europe and the official said it was not possible simply to allow energy-related transactions and exclude others as SWIFT was unable to differentiate between types of payments.

Polish Prime Minister Mateusz Morawiecki said the decision to exclude Sberbank and Gazprombank from sanctions due to "transactions related to energy supplies to the EU" was unacceptable.

"As Poland, we demand that all Russian entities, thanks to which Russia finances the war in Ukraine, be effectively and fully covered by sanctions," he wrote on Facebook.

Lithuanian Prime Minister Ingrida Simonyte told a news briefing that more Russian banks could be excluded from SWIFT, which has 11,000 members and no clear global rival.

Although China has set up its own system, it remains small, EU officials said, and despite the existence of a Russian system as well, SWIFT is still used for some 70% of transfers there.

Banks could still carry out transfers through work-arounds such as faxes or bilateral messaging systems, if they existed.

VEB said it was largely focused on domestic projects which were unaffected. For overseas-related businesses it would use SPFS, a messaging system developed by Russia's central bank.

Sovcombank said SWIFT would not impact it because other sanctions had already blocked its ability to make overseas payments. Promsvyazbank said it was prepared for the disconnection from SWIFT and it would not have a significant impact on the bank's operations.

VTB and Otkritie said they would not be impacted.

Novikombank and Bank Rossiya did not respond to requests for comment.

(This story refiles to correct spelling of Bank Otkritie in paragraph 2)

Reporting by Philip Blenkinsop; Writing by Tommy Wilkes; Additional reporting by Anna Koper in Warsaw; Editing by Huw Jones, Alexander Smith and Sandra Maler

Our Standards: The Thomson Reuters Trust Principles.

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EU bars 7 Russian banks from SWIFT, but spares those in energy

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BRUSSELS, March 2 (Reuters) - The European Union said on Wednesday it was excluding seven Russian banks from the SWIFT messaging system, but stopped short of including those handling energy payments, in the latest sanctions imposed on Russia over its invasion of Ukraine.

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“Surely some of you can pick a different color? Please?”

Early this morning Apple published an unprecedented tech note aimed at Swift bloggers around the world, pleading them with them to be more creative with their color choices.

Ed Kermenek, the Swift project lead, had this to say: “Look, we get it: we chose orange for the logo way back in 2014, and that obviously led some people to think of it as the Official Swift Color or something, but come on – surely some of you can pick a different color? Please?”

Taking a break from his work on Swift Enterprise Edition, Jay Gorff took a more hardline stance: “Frankly, I never want to see the color orange again. I can’t eat oranges, carrots, or pumpkins any more, and you jerks have completely ruined Cheetos for me too. Wait… it’s almost sunset, and I can already feel my stomach getting into a knot thinking of the colors – do you see what you monsters have done?!”

Bolly Horla, who is somehow still not on the Swift Core Team despite being more than qualified, pulled out a tabbed binder of colors the team considered more appropriate. “How about a nice blue,” she said, “or some shade of chartreuse? Ooh, why not try plaid? I bet we could solve this with some kind of @Color property wrapper…”

Steve Prestoff, currently working to make Swift compile faster, took a break to add: “Chickens.” We’re not sure if that means he likes the color of chickens, the taste of chickens, or something else, but at least he’s not on a hor— oh, wait, he’s back on a horse again.

Sponsor Hacking with Swift and reach the world's largest Swift community!

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Swift Core Team to Swift bloggers: “Please, for the love of all things holy, find a different color than orange”

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“Surely some of you can pick a different color? Please?”

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https://insidesources.com/why-is-the-swift-system-so-important-to-russia/

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A SWIFT (Society for Worldwide Interbank Financial Telecommunication) code is almost always required when you are party to an international money transfer. SWIFT is what allows a specific bank account to be identified in an international banking transaction. Without the use of a SWIFT, generally, it is impractical or impossible to make an international transfer.

That is why SWIFT has gone viral on social media and in the news this week. As part of a package of sanctions against Russia for the invasion of democratic Ukraine, SWIFT was at its core.

Banning Russia and wealthy Russians from SWIFT is arguably the most powerful economic weapon the world has to stop Russian aggression. Assuming that the hypothesis that Russian President Vladimir Putin is taking a huge gamble in invading Ukraine and risking an ongoing conflict that could lead to deep internal fissures in his power base in Russia, what financial weapon could be more powerful against him than SWIFT?

Adriana Gonzalez, a Florida lawyer, explains that SWIFT has massive practical importance for Russia:

“Given the fact that SWIFT has over 11,000 financial institutions around the world, any nation that sells a massive amount of a resource – as Russia does with gas and oil – will find themselves hard-pressed to find a viable legal option to receive funds if they are no longer allowed on the SWIFT system.”

On Thursday, rather than blocking Russian access to SWIFT, President Joe Biden explained the United States, joined by the European Union and the United Kingdom, would not block Russia from SWIFT. Instead, Biden is leaving the threat of a SWIFT ban on the table and is, for now, blocking the five largest Russian banks from the U.S. banking system.

But that decision came down around 10 hours before the Russian invasion of Ukraine hit the capital city, Kyiv. The move could and should be a game-changer for the allies, as this should be viewed as something that the United States actually minds enough to immediately ramp up sanctions as a message to Russia that this heightened aggression will not stand.

On Saturday evening, the U.S. and the European Commission along with Canada, France, Italy, Germany, and the U.K. announced they were expelling select Russian financial institutions from SWIFT.

If Russia is entirely removed from the SWIFT system, it has two practical options. For transactions limited to within Russia, they have their own version of SWIFT – the System for Transfer of Financial Messages. After Russia invaded Crimea in 2014 and feared that its SWIFT access would be revoked, it built this internal system.

The other option is, of course, cryptocurrency. Yet only the most ardent enthusiasts of crypto believe that such an incendiary currency is a wise base upon which to sustain an economy, even in the short term. The internal pressure the most powerful Russian businesses could put on the Putin regime if faced with wildly fluctuating payment options for their goods and services could be extreme.

Sanction options can change as quickly as the situation on the ground and in their skies over Kyiv, so this is a rapidly-evolving story that will be closely watched by all of the allies and by Russia itself as it considers its next moves.

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Why Is the SWIFT System So Important to Russia? – InsideSources

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A SWIFT (Society for Worldwide Interbank Financial Telecommunication) code is almost always required when you are party to an international money

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The Society for Worldwide Interbank Financial Telecommunications, commonly known as SWIFT, provides a secure, standardized network environment that allows financial institutions worldwide to exchange information about financial transactions.

With more than 35 million transactions carried out through its network every day, SWIFT is one of the most common ways to transfer money internationally.

But how does SWIFT work behind the scenes and, more importantly, is it the best way for you to send money abroad? In this article, we explore what SWIFT is, its pros and cons, and better alternatives for international money transfers.

A SWIFT transfer is an international money transfer done via the SWIFT network. SWIFT Payment is the acronym of the Society for Worldwide Interbank Financial Telecommunication.

The network has more than 11,000 member institutions worldwide, such as banks and other financial organizations like exchanges or clearinghouses.

Having been around for the past 50 years, SWIFT has become the standard way to move money between banks anywhere in the world.

So how does a SWIFT transfer work?

SWIFT functions as a messaging network, in the sense that banks ‘communicate’ payment instructions or orders between bank accounts rather than delivering actual funds.

These payment orders are sent using standardized codes (SWIFT codes) which ensure that your money gets to the right destination. As you may have noticed, you are asked for this code every time you make a money transfer overseas.

A SWIFT code (also called a BIC code) is unique to each financial organization and contains 8 or 11 characters identifying:

The institution (for example RZBR for Raiffeisen Bank)

The country (for example IT for Italy)

The city or location (for example MM for Milan)

Optionally, the branch (XXX)

When the sender and recipient banks have a commercial relationship with one another, money gets delivered as soon as the destination bank receives the SWIFT message from the sending bank.

But if the two banks do not have a direct agreement, one or several intermediary banks will facilitate the process, adding to the cost and time of the transfer.

Since SWIFT is used for cross-border payments, the original currency has to be converted to the destination currency; one of the banks involved will usually do the currency exchange. Depending on the sender and destination currencies, a double currency conversion may take place.

How long does a SWIFT payment take?

Once the transfer is initiated, a SWIFT payment can take anywhere between 1 to 5 working days to complete.

One of the main reasons for the slow transfer of funds via SWIFT are the fraud prevention and anti money laundering (AML) procedures in place by the banks involved in the transaction.

Another factor is that when the sender and recipient banks do not have a direct agreement, intermediary banks will prolong the process.

Then, bank holidays, weekends, and schedules can also impact the duration of the transfer processing.

What information do you need to make a SWIFT transfer?

To send an international SWIFT payment, you need to provide the following information:

Your recipient’s name and address

Name and address of the recipient’s bank

Recipient’s account number (IBAN)

BIC or SWIFT code of the recipient’s bank

How safe are SWIFT payments?

SWIFT has been around for over four decades and has become the norm for secure international money transactions.

This is due to the fact that the SWIFT network simply communicates encrypted money transfer instructions between banks or financial institutions instead of actually moving funds from one place to another.

As such, during a SWIFT money transfer money is only handled by the banks involved in the transaction, making it a highly safe and secure way of sending money overseas.

SWIFT transfers step by step

Making a SWIFT money transfer requires a few steps:

1. Verify your identity

You can make a bank transfer online from your internet banking account or from your bank’s online wire transfer option. You’ll need to log in or confirm your identity to avoid any fraud.

2. Make sure you have enough funds

Make sure you have enough money in your account to avoid your bank declining your payment due to insufficient funds.

3. Check the exchange rate

Exchange rates vary slightly from one money transfer service and one bank to another. Be sure to check that the rate your bank offers is within your range and whether you’ll be charged an extra fee for the currency conversion.

4. Confirm your transfer

If you agree to the exchange rate, you can go ahead and confirm the payment.

5. Your money is delivered

Your funds will be converted and received by your recipient in their bank account’s currency, at the exchange rate agreed.

How much does a SWIFT transfer cost?

SWIFT transfers are among the most expensive ways to move funds from one bank account to another.

The costs include:

The bank’s transfer fee (usually a % of the transaction value)

Currency exchange (banks will often quote poor exchange rates to inflate the total costs for a transfer)

Possibly double currency conversion, currency exchange charges, or other ‘hidden’ fees

Exchange rates between any two currencies vary between banks, and they also change on a daily basis.

Pros and cons of SWIFT payments

Main Benefits:

1. As an established payment method, SWIFT transfers are subject to rigorous anti-fraud and anti-money laundering verifications, which helps keep your bank account and transactions secure.

2. SWIFT is used in more than 200 countries by over 11,000 organizations, which makes it widely available for money transfers between almost any two countries.

There are downsides to SWIFT transfers:

1. First, the rather complicated mechanism makes transfers slow, with up to 5 working days needed to complete a transaction. Delays can be even longer depending on the destination, bank cut-off times, and agreements between banks.

2. Secondly, SWIFT money transfers are pretty expensive. If an intermediary bank is needed to complete the process, additional fees will be added to the total cost of your transfer.

3. And last but not least, sending money overseas using SWIFT is not plain sailing. You are required to input a lot of information including the name and address of the recipient, the name of the bank, the SWIFT or BIC code, and the recipient’s IBAN (bank account) number.

Is there a faster and cheaper way to send money overseas?

While there is no denying that in its early days SWIFT transformed international money transfers, solutions are available today that provide faster transfers and a better experience.

A fintech innovator, Fin.do is the easiest way to send and receive money worldwide, in seconds. Our platform enables instant money transfers in any currency, with no currency conversion fees.

With Fin.do you can transfer money using nothing but your smartphone, which increases the availability of money transfers and access to funds for people anywhere in the world.

Here is how Fin.do money transfers compare to SWIFT transfers:

| SWIFT network | Fin.do
Speed | 3 or more working days to complete | Transfers are delivered instantly
Currency conversion | Double currency conversion depending on the currencies involved | Direct currency conversion between any two currencies with no extra fees
Recipient information | Complex recipient details required (including IBAN) | Send money to contact or to a card number
Fees | Fees can be shared between sender and recipient | One unique fee, shown to the sender upfront
Transparency | Complex routing of money between banks | Money is sent from card to card and ready to use in seconds

If you’d like to see how fast Fin.do transfers are compared to international bank transfers, get the app with no monthly charges and no hidden fees.

We hope you found this tour interesting! And remember: your next international money transfer CAN be instant, easy, and secure!

Happy transfers!

Frequently asked questions about SWIFT:

Who uses SWIFT?

SWIFT’s global financial infrastructure is adopted and used by many types of institutions across financial and capital markets, including banks, exchanges, depositories, brokerages, currency exchanges, securities dealers, and asset management organizations.

What do I need to receive SWIFT transfers?

A SWIFT transaction is initiated by the sender. You’ll have to provide your sender with details including your name, your account number (IBAN), your address, your bank’s name, and the SWIFT or BIC code of your bank.

If you don’t know your bank’s SWIFT/BIC code, you can obtain this information from your bank or their website.

How do I send SWIFT transfers?

To make a SWIFT transfer overseas, you need to enter your recipient’s information (their name, address, their bank’s name, and address, the recipient’s bank account number, and their bank’s SWIFT/BIC code), the amount you want to send, and confirm your payment.

Note that a BIC/SWIFT code is mandatory for any international transaction except for the SEPA zone.

If you send euros between EU countries in the SEPA network, your transfer will be processed within 1 working day and you don’t need a BIC or SWIFT code. You’ll still need the recipient’s IBAN or bank number.

How do I track a SWIFT transfer?

SWIFT’s gpi tracker enables banks to track their SWIFT transfers at all times using a unique transaction reference included in each payment. You should be able to find out whether the money has been deposited into the recipient's account from your bank.

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SWIFT Transfer Explained: What is it and how long does it take?

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What is a SWIFT payment and how does it work in 2022? In this article, we will explain international SWIFT transfers for personal and business users.

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In this article state that US had control the banking system of the world through the SWIFT Payment Network.

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Op/Ed by Chris Devonshire-Ellis

Unhappiness with the manipulation by the United States of the global SWIFT payment network to effectively cut entire countries off from the global banking system has lead to an increasing number of alternatives being developed. SWIFT currently accounts for about 40% of all global currency transactions, yet has been used by the United States as a tap to turn on or off financial trade from countries it wishes to punish.

Two of these are Russia and Iran, who are coordinating efforts to unite the Russian financial messaging system and Iran’s SEPAM as an alternative to making payments through SWIFT for protection against third countries’ sanctions, Russian presidential aide Yury Ushakov told reporters on Friday.

“To protect bilateral trade and economic ties from the sanctions of third states, we are taking measures to expand direct settlements, use national currencies, and to establish interaction between the Russian financial messaging system and Iran’s SEPAM, as an alternative to making payments through SWIFT.” Ushakov said.

The Society for Worldwide Interbank Financial Telecommunication, known as SWIFT, announced in November that it would sever ties with individual Iran-based banks for the sake of the “global stability of the system,” without elaborating.

The announcement came on the same day as the US Treasury Department imposed sanctions against the Iranian economy’s energy, banking and shipping sectors. Several days prior, the US had warned that SWIFT, like any other entity, must abide with the US sanctions falling under secondary US sanctions.

Russia and Iran are not the only countries looking at alternatives to US-controlled banking networks. Russia and China have also been looking at developing alternative systems. China’s CIPS is looking at coordinating with Russia’s SPFS to handle all Russia-China transactions, while the Eurasian Economic Union, with a trade GDP of US$5 Trillion, has effectively de-dollarized its trade by 70% with the aim to dump the US dollar entirely. Russia has also stated it will not conduct any sovereign borrowings in US$ from next year. The BRICS grouping of Brazil, Russia, India, China and South Africa has also announced that the BRICS New Development Bank will also move away from use of the US dollar in loans, and will introduce the BRICSPay system to allow nationals of their countries to make payments in their own currencies and also avoid the US dollar. Turkey is also looking at alternative payments systems.

It is unclear exactly what the impact on the US dollar will be. Washington seems unconcerned. However, the economies of China, Russia, India, Brazil, Iran and Turkey are significant. Should the trend continue, the dollar could be ousted as a global reserve currency. Both China and Russia have also been buying up significant quantities of gold, with calls for an alternative to the US system of currency backed by debt to be replaced with currencies backed by assets. There are scenarios, currently on the fringes of US dollar thought, that predict a crash in the value of the US dollar will occur. Again, Washington is apparently unconcerned and does not take such suggestions seriously. But what if the share of global trade did follow a de-dollarization path? There are some very smart people within the Governments of the anti-US dollar nations, and they do account for a very large chunk of total trade volumes. At present, the possibility of a US dollar crash remains theoretical. But the movements to dump the dollar and hoard assets instead meanwhile appears to be growing. The old adage “Hope for the best – but prepare for the worst” is, at the very least, when applied to the US dollar, a disconcerting one.

Related Reading

China and Russia’s Strategy to End US Dollar Trade Dominance

Major Belt and Road Nations Increasingly Looking at Avoiding the US Dollar

Russia & Central Asia’s Gold Deposits – China’s RMB Reserve Backup

Russia Briefing Introduction

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Russia, Other Countries Abandon SWIFT Payment Network And Establish Alternatives - Russia Briefing News

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Op/Ed by Chris Devonshire-Ellis Unhappiness with the manipulation by the United States of the global SWIFT payment network to effectively cut entire countries off from the global banking system has lead to an increasing number of alternatives being developed. SWIFT currently accounts for about 40% o…

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The Russian invasion of Ukraine has pushed the plumbing of financial transactions into the spotlight. Sanctions against Russia include a proposal to limit the country's access to SWIFT, a platform for facilitating money transfers that is integrated into banking systems worldwide.

What is SWIFT?

SWIFT, which stands for the Society for Worldwide Interbank Financial Telecommunication, is a messaging system that allows banks around the globe to securely and quickly communicate about cross-border payments. It is widely used. There are about 11,000 member banks in 200 countries and territories that use SWIFT. In February 2022, the system sent 82 million messages.

SWIFT is controlled by the central banks of the G10 countries, the European Central Bank, and the National Bank of Belgium.

How does SWIFT work?

An important component of the SWIFT messaging system is the SWIFT code. Each bank that participates in the system is assigned this code, which identifies the bank, the country it's in, where it's located in the country, and, optionally, the branch.

Which banks will be banned from using SWIFT?

The European Union is discussing which Russian financial institutions to exclude from the SWIFT system. Under consideration are seven Russian banks, according to a draft list seen by Bloomberg. That list did not include Russia's largest lender, which is part-owned by gas giant Gazprom. The seven banks are:

Limiting Russia's access to SWIFT is one part of disconnecting it from the international financial system. However, SWIFT is not a payment or settlement system in itself. It is only the messaging system that enables those transfers.

Banks cut off from SWIFT could use other systems, like the SPFS system, established by the Russian central bank after the 2014 invasion of Crimea, or the CIPS network, created by the People's Bank of China. Notably, international payments to Gazprom for Russian oil and gas are not made via SWIFT.

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A visual explainer of SWIFT, the global payments system now cut off to Russia

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The Russian invasion of Ukraine has pushed the plumbing of financial transactions into the spotlight. Sanctions against Russia include a proposal to limit the country's access to SWIFT, a platform for facilitating money transfers that is integrated into banking systems worldwide.

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SWIFT and Russia: what is going on, and what new opportunities it can bring?

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(Dmitry Demidko via Unsplash)

Since 2014 there have been on and off polemics about Russia's possible disconnection from the SWIFT system. In the last weeks, those conversations have been increasingly mentioned in the media and seriously affected the mood in the banking environment. CBDO at Bank 131 Anna Kuzmina explained why blocking SWIFT in Russia is not a fatal scenario and what sanctions against banks can cause concern.

What is SWIFT?

SWIFT is not a payment system. It is a kind of international language in banking communication that allows banks from different countries to interact. In a legal sense, SWIFT is an international organization that controls the transmission system of banking information. The organization is under the jurisdiction of the United States and meets the standards of the American regulator.

How SWIFT works

When SWIFT appeared in the 1970s, information transmission channels weren't as quick as today. The SWIFT system became a universal language that allows banks to receive detailed information about the bank transfer. Technically, documents passing through SWIFT are files in a particular format like XML, convenient and easy to read

Since the 70s and until now, SWIFT has been a system for transmitting information with specific encryption standards.

Russian SPFS and analogs

In 2014, due to the heated sanctions rhetoric, the Central Bank of Russia created its platform. The financial messaging system of the Bank of Russia or SPFS became an alternative channel for sending and receiving messages about financial transactions. Today Russian banks do not require SWIFT to communicate within the country.

Currently, 400 banks have already connected to SPFS. Among them are Russian banks, a few banks of the CIS countries, and banks from Germany, Switzerland, France, Japan, Sweden, Turkey, and Cuba. The number of foreign participants in the SPFS system is constantly growing, and by the end of 2021, it was 40 of them in total. It is not a lot compared to the number of SWIFT participants.

There are also several more analogs of SWIFT in the world. For example, the Chinese CIPS system and the European INSTEX, created to work with Iranian banks.

What happens if a country disconnects from SWIFT?

If one disconnects an entire country from SWIFT, its banks will no longer receive information about senders and recipients of international payments. Transfers will continue but will be happening with delay. Theoretically (!), in the case of blocking SWIFT in Russia, all interested foreign banks will join the SPFS. In practice, the mechanism of the Russian system is still in the process of development, and it will bring a negative impact on the speed of transactions and the quality of communication. So either that won’t happen until the SPFS is fully developed, or the alternative modern system will appear.

SWIFT is a commercial product, and the business interests of its participants are often larger than politics. In 2014, SWIFT abandoned the idea of blocking Russia, as this global system could have lost its monopoly. The Russian market cut-off will be a considerable loss for SWIFT and all other commercial and government companies trading with Russia. Even some European countries oppose such measures.

Where real danger lies

Blocking correspondent accounts of Russian banks abroad is one of the most provoked issues today. The worst-case scenario will be if foreign banks block foreign currency accounts for all Russian banks. Such matters of shutting down correspondent accounts have been the case in Iran and Belarus, which seriously hit their banking systems and economies.

Central Banks of different countries do not have a technical way of communication. Their banks must build an international network and negotiate directly with each other. The ban on Russian bank accounts in foreign banks will prevent all transactions with Russian businesses that work with foreign counterparties and vice versa.

Are there alternatives for international payments?

An alternative to the system of correspondent accounts can be the digital currencies of central banks (Central bank digital currency - CBDC). With the help of CBDC, central banks can build communication and move the currency among themselves directly. In this case, the international network of correspondent banks will no longer be in demand. Technically, this is already possible, but there are no regulations or arbiter organizations yet.

Sooner or later, this is bound to happen because banks’ reliance on SWIFT created in the 1970s cannot work forever. As the fintech companies rapidly grew, CBDC became an excellent potential alternative for international payments. However, this revolution can only happen with the official cross-border CBDC kick-off due to the political will of the Central Banks of different countries. If this ever happens, SWIFT and correspondent banking will become unnecessary. It remains only to wait for such precedent.

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Bank 131 is a digital bank with a focus on compliant online banking for international digital businesses in the Russian market.

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SWIFT and Russia: what is going on, and what new opportunities it can bring?

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(Dmitry Demidko via Unsplash) Since 2014 there have been on and off polemics about Russia’s possibl

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Swift serves as an intermediary and executor of smooth and rapid financial transactions between banks around the world (Photo: Maxim Shemetov/Reuters)

In response to the invasion of Ukraine, major western countries have announced sanctions on Russia, stretching from its banks to elites.

As things escalate and Putin's troops head towards the capital Kyiv, Britain's Defence Secretary Ben Wallace would like to cut off Russia from the Swift global interbank payments system.

But the UK will have to convince other countries who are reluctant to take that step.

So what is Swift and how will it affect Russia and the rest of the world if the country is cut off? Here's what we know.

What is the Swift banking system?

Swift stands for the Society for Worldwide Interbank Financial Telecommunication.

Founded in the 70s, it is based in Belgium and serves as an intermediary and executor of smooth and rapid financial transactions between banks around the world.

This allows international trade to flow smoothly and quickly and in 2020, about 38 million transactions were sent each day over Swift.

In order to exchange transactions, each financial institution must have a banking relationship by either being a legal bank or through its affiliation with at least one bank.

Swift securely transports financial messages but doesn't hold accounts for its members or performs any form of clearing or settlement.

Why does the UK want to cut Russia from Swift?

Swift allows Russia to move money around the world to receive payments for its gas.

After the West unveiled sanctions on Russia, Mr Wallace told the BBC: "We would like to go further, we'd like to do the Swift system.

"But... these are international organisations and if not every country wants them to be thrown out of the Swift system, it becomes difficult."

Labour leader Sir Keir Starmer backed Mr Wallace and said "further financial restrictions" against Russia are needed.

Speaking on Good Morning Britain, Sir Keir said he supported the Government's package of sanctions announced on Thursday but called for extra measures.

Sir Keir said: "In relation to the sanctions, I thought what the Government put forward earlier this week was not strong enough. They came forward yesterday with a stronger package and I was able to say that we, the opposition, will support those further sanctions.

"I do want to go further. I think that we do need further financial restrictions, particularly the Swift mechanism. I also think we've got to break open the shell companies we have here in the UK that are providing financial support for Putin."

How would it affect Russia?

If Russia was locked out, it could harm the country's economy as simple, everyday transactions would have to go directly between banks which could cause delays and be expensive.

But the head of VTB, a large Russian bank, recently said the bank could use other payment methods, such as emails or messaging apps.

The country could also use payment channels through countries that haven't imposed sanctions, such as China.

Why is the UK alone in wanting Russia to be cut off?

In a tweet posted on Thursday, Ukrainian President Volodymyr Zelensky said: "We demand the disconnection of Russia from Swift, the introduction of a no-fly zone over Ukraine, and other effective steps to stop the aggressor."

But while the UK has called for Russia to be blocked from Swift, US President Joe Biden said neither the US or the EU wanted this as there are concerns it could cause enormous economic problems in Europe and elsewhere in the West.

But he said they could revisit that issue.

Wallace said Britain would continue to lobby its allies to win support for a move on Swift.

"We will work all the magic, do everything we can in diplomacy."

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Swift explained and how sanctions on payments could affect Russia

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In response to the invasion of Ukraine, major western countries have announced sanctions on Russia, stretching from its banks to elites. As things escalate and Putin's troops head towards the capital Kyiv, Britain's Defence Secretary Ben Wallace would like to cut off Russia from the Swift global interbank payments system.

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Among the financial sanctions imposed by Western countries on Russia is the exclusion of several Russian banks from the SWIFT payment system, which facilitates smooth and rapid money transfers across nations. Without access to SWIFT, Russian banks will find it harder to communicate with international peers which will slow down trade and make transactions costlier. According to a US White House official, if one of the banks cut off from SWIFT wants to make a payment with a bank outside of Russia, it will likely need to use a phone or fax machine. Russian companies and individuals will find it harder to pay for imports and receive cash for exports, borrow or invest overseas. Let's learn more about SWIFT and what it does. The Society for Worldwide Interbank Financial Telecommunication, or SWIFT, is the world's leading provider of secure financial messaging services. It facilitates trillions of dollars of cross-border payments between 11,000 financial institutions in more than 200 countries. Each member has its own SWIFT code. Every day, more than 40 million financial messages are exchanged securely using the SWIFT platform. Headquartered in Belgium, SWIFT is a global member-owned cooperative that was founded in 1973 by 239 banks from 15 countries. It went live with its messaging services in 1977, replacing the Telex technology that was then widely used by banks to communicate instructions related to cross-border transfers. The SWIFT Standards group maintains several important message standards. The use of standardised messages and reference data ensures that information exchanged between institutions is unambiguous and machine-friendly, facilitating automation, cost reduction and risk mitigation. Through SWIFT, banks, custodians, investment institutions, central banks, market infrastructures and corporate clients can connect with one another to exchange structured electronic messages for common business processes like making payments or settling trades. SWIFT is a cooperative society under Belgian law and is owned and controlled by its shareholders, representing approximately 3,500 financial institutions across the world. The shareholders elect a board of 25 independent directors representing banks across the world. This board governs the company and oversees ist management.

The executive committee is a group of full-time employees headed by the chief executive officer. Each nation's usage of SWIFT's messaging service determines both SWIFT shareholding allocations and the number of board directors that each nation is entitled to. SWIFT is overseen by the central banks of G-10 countries, as well as the European Central Bank, with the National Bank of Belgium as the lead overseer. It is important to note that SWIFT is only a messaging service provider. It has no control over the underlying financial transactions that are mentioned by its financial institutional customers in their messages. While SWIFT complies fully with all applicable sanctions laws, the responsibility for ensuring that individual financial transactions comply with sanctions laws rests with the financial institutions handling them, and their competent authorities. In March 2012, as international sanctions tightened against Iran over its disputed nuclear programme, SWIFT was prohibited from providing financial messaging services to European Union-sanctioned Iranian banks. SWIFT, since it is incorporated under Belgian law, had to comply with this regulation as confirmed by its home country government and disconnect these Iranian banks. In January 2016, many of the affected banks were removed from the sanction list by the EU and were subsequently reconnected to SWIFT. In 2014, Russia developed its own alternative to SWIFT. It is called the System for Transfer of Financial Messages, or SPFS. But this system has struggled to establish itself in international transactions. Similarly, China launched the Cross-Border Interbank Payment System in 2015 to internationalise the use of the yuan. It allows global banks to clear cross-border yuan transactions directly onshore. CIPS still largely relies on SWIFT for cross-border financial messaging, but it has the potential to have and independently operate its own direct communication line among financial organisations. About 1,280 financial institutions from 103 countries and regions are connected to the CIPS, which processed more than $12 trillion in 2021.

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Read more about What is the SWIFT payment system? on Business Standard. Following Russia's attack on Ukraine, the EU and the US announced measures to block selected Russian banks from the SWIFT payments system. What is SWIFT? Watch this report to know more about it

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Author, Mike Smith
A SWIFT transfer, also called an international money transfer, is a secure and standardised method of sending or receiving money from banks anywhere in the world.

SWIFT is basically a messaging system for banks. It works by linking up banks using standardised codes for payments.
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) has been around since the 1970s.

SWIFT is owned by its member financial institutions.

Today, it consists of a network of 11,000 financial institutions located in over 200 countries.

How long does a SWIFT transfer take?
A SWIFT payment generally takes 1-4 working days.
The time taken varies based on the destination, time zones and different banking procedures.

SWIFT transfers aren't instant.

Before your funds are credited to the recipient, they will undergo anti-fraud and anti-money laundering checks, which takes time.

Some banks may also route your money via an intermediary bank if there is no direct relationship between your bank and the destination bank. This can also make the process slower.

What information do you need for a SWIFT transfer?

To send money abroad using SWIFT, you need the following information:

The SWIFT code just identifies the bank.

The IBAN (International Bank Account Number) is longer and identifies a specific bank account.
The SWIFT code, also known as a Bank Identifier Code (BIC), can be found by searching online. It is not personal information, so it is widely available.
Some banks automatically show the SWIFT code on their statements, but this is not always the case.

For security reasons, it is best to get it directly from a bank's website.

Note that you are providing the SWIFT code for the bank receiving your money, not the bank you're sending it from.

An IBAN is longer than a SWIFT code because it also includes specific account information.

IBAN's vary in length depending on the country.

They can be anything from 16 to 32 characters long.

There are IBAN generators online that show you the structure of an IBAN for each country.

While it might sound complicated, an IBAN can be broken down into logical parts, so it's a case of piecing it together.

If you are worried about this step, a money transfer specialist can always assist you with this.

How a SWIFT transfer works (in 4 simple steps)

Step 1: Identification check

All customers making an international payment need to be identified due to global anti-money laundering rules and regulations.

You may need to email a scan or photo of your passport and a recent bill.

Step 2: Secure an exchange rate

In order to send money from one currency to another, you need to agree an exchange rate.

Once you are ready to move your money, a bank or money transfer company will quote you their current exchange rate.

If you are happy to go ahead, the exchange rate quoted will be locked-in for you.

Step 3: Send in your money

Before any money is converted, your bank or money transfer company will need to receive your funds.

If you use a bank, they will require your funds before you secure an exchange rate. However, if you use a money transfer company, they may allow you can secure a rate before you send in your money.

Step 4: Your money is converted and sent

After your funds have been received, they will get converted into the currency required at the exchange rate agreed.

The funds are then sent using the SWIFT network to the destination bank account.

What does a SWIFT transfer cost?

The cost of a SWIFT transfer varies depending on the bank or money transfer company you use.

There are generally two types of charges to be aware of:
Each bank or money transfer company will charge a combination of fees and exchange rates for SWIFT transfers.
While that can make comparisons tricky, it ultimately comes down to how much money you receive net of all charges.

For SWIFT transfers, the big UK banks can charge an assortment of fees.

The most common types are a transfer fee and a recipient fee.

Fees are normally a fixed amount for every SWIFT transfer.
Here are the fees charged by the UK's four largest banks:

Barclays: no fee online or £25 if you use a branch. They also charge the recipient £6.

Lloyds: charge £9.50 whether online or in a branch, and the recipient is also charged £12.

HSBC: charge £4 online or £9 in a branch, and the recipient is charged £8.

Natwest: £15 if under £5,000 or 0.3% (max £40), and the recipient is charged £7.50.

It is possible you may also be charged correspondent bank fees if an intermediary bank is used in the process of getting your money to its destination.

Also, if you want to speed up your payment, some of the banks also charge a priority payment fee.

The only real way to avoid these fees is to bypass your bank altogether.

Some money transfer companies, such as Key Currency, don't charge any fees for SWIFT transactions.

It not only saves money; it makes it far more straightforward for the customer to know how much money they will receive.

Getting a better exchange rate on your money transfer

A lot of people focus on the fees and forget the exchange rate.

But the exchange rate is normally the biggest cost of a SWIFT transfer.
Exchange rates are by no means standardised.
In our experience, the big UK banks don't come close to offering the best rates.

It's probably because they know some customers will just accept whatever they charge without question.

As a ballpark, you can expect the big banks to charge 3%-5% in exchange rate costs on a SWIFT transfer.

The exchange rate will vary based on the amount you send.

It is worth noting that for larger international transfers, the exchange rate costs tends to be far more significant than the fees.

On a SWIFT transfer of say £120,000, say your bank added a 3% exchange rate margin.

That means they've charged you £3,600 just off the exchange rate.

A lot of money in anyone's books.
Another important consideration is that the banks won't provide you with any help on the timing of your SWIFT transfer.
Because exchange rates are continuously fluctuating, timing can be critical.

Some money transfer specialists, such as ourselves, are happy to monitor rates for you and let you know when the rate moves in your favour.

A better exchange rate will ultimately put more money in your pocket.

How safe are SWIFT transfers?
SWIFT is a highly secure and reliable payment network that's been used for over four decades. It's estimated that almost half of all cross-border payments globally use the SWIFT network.
Don't forget, though, SWIFT is just a method of communication that moves money from one account to another.

SWIFT doesn't handle the money.

Your bank or money transfer company does that part.

That's why it's worth making sure you are dealing with a company that is Authorised by the Financial Conduct Authority (FCA).

A bank or money transfer company that is Authorised by the FCA must keep all client funds in a safeguarded bank account used only for customer transactions.

That's an important protection.

To find out if a company is Authorised just type their name into the Financial Services Register.

Quick Summary: SWIFT money transfers

SWIFT is a safe and secure payment system that has been used for decades.

To make a SWIFT transfer, you can use a bank or money transfer specialist.

A SWIFT international payment can take anywhere between 1-4 working days.

Banks typically cost more for SWIFT transfers than money transfer companies.

Make sure you use a company Authorised by the FCA.

Key Currency is a leading money transfer specialist.

Every day, we help individuals and businesses move their money around the world.

What sets up apart from other companies is we provide a service.

All customers are assisted with their SWIFT payments to avoid any mistakes or hiccups.

We can also discuss your requirements and agree on the right time to exchange your money, rather than using a bank or online-only system, and having to accept whatever rate they give you on the day.

Our exchange rates are highly competitive, and we charge you no fees on SWIFT transfers.

In terms of regulation, we are an Authorised Payment Institution (Financial Services Register register No. 753989). All payments are conducted through safeguarded client accounts held at top tier banks.

Our company has attained a 5-star customer rating on Trustpilot, based on over 700 reviews.

If you would like to compare us to your bank or existing provider, simply request a free quote below.

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SWIFT Transfers explained (how they work, how long they take & what they cost)

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Author, Mike Smith A SWIFT transfer, also called an international money transfer, is a secure and standardised method of sending or receiving money from banks anywhere in the world. SWIFT is basically a messaging system for banks. It works by linking up banks using standardised codes for payments.

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https://dmerharyana.org/swift-banking-system/

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DMER Haryana: Recruitment, News, Admit card, result

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In the era of global commerce, countries have sought safer and more secure ways to transfer funds between banks. Networks and intermediaries are often needed to ensure international transactions are executed smoothly. SWIFT Banking System is the name of the organization that facilitates worldwide interbank financial communications.

With the introduction of SWIFT, banks have sent and received money more conveniently and securely among themselves. The reason for using the word 'communications' is because you'll see in the following lines that SWIFT is nothing more than a messaging system between banks. In a SWIFT transaction, payment instructions are transmitted electronically from the payer. Depending on the process, funds will be moved between Nostro / Vostro accounts.

If a bank wants to conduct international business, it usually opens a Nostro/Vostro account with a different bank. The Nostro and Vostro account both keep records of the deposited money into the account, so both banks maintain two mirroring ledgers.

What is Swift Banking System?

To transfer money between banks, the SWIFT protocol is used. The transfer occurs as soon as the SWIFT message is received between two banks with a relationship (commercial accounts). By using a commercial account, money is transferred from one's account to another's. The banks charge a fee.

An intermediary bank will assist those two banks if they don't have a relationship. In addition to the fee, the intermediary bank will also take on another fee. One of the banks will exchange the currencies if more than one are involved in the transfer.

How does the Swift Banking System Works?

SWIFT was designed to help banks communicate faster, more securely, and more effectively in its original form. Especially in transferring money internationally. SWIFT acts as a messenger between banks, so "communicate" is always used. It is through this message that instructions are transmitted to the receiving bank on how to process the payment.

Based on an underlying network of Nostro and Vostro accounts, all banks involved in SWIFT transfers will transfer funds from one account to another. It refers to accounts between banks that are solely used for SWIFT transactions.

Due to both banks keeping records of deposits, they create two sets of ledgers, Nostro and Vostro, for the same account. Regarding Nostro and Vostro, Nostro is an account for holding money, while Vostro is an account that a bank opens in their books to receive money.

Both banks can make SWIFT transfers directly and immediately when both banks deal with the Nostro and Vostro accounts. SWIFT has to determine how to pass messages when banks don't have this relationship. A SWIFT transaction can begin as soon as a correspondent bank for the two institutions is found that has a commercial relationship between them. You will be charged more to send payment when more intermediary banks are involved. In addition to taking longer to send, more parties are involved, so the risk is higher.

What makes SWIFT so successful?

The dominant figure in the payments space has been a numbers game for SWIFT. Although SWIFT is famous, its simplicity makes it popular. Due to its constant innovation and user-friendliness, SWIFT is an excellent payment instruction system today. Various payment messaging systems are available in the market today, like Fedwire, CHIPS, and Ripple.

How will this be used by its target audience?

Financial institutions rely on SWIFT. This service was initially created to allow full scalability. In addition to banks, SWIFT can also be found in trading firms, asset management firms, stock exchanges, foreign exchange houses, and treasure markets.

How will Swift be affected in the Russia-Ukraine War?

A cutoff of SWIFT from Russia would significantly impact the economy. Former Russian Finance Minister Alexei Kudrin estimated the country's GDP would shrink 5% without SWIFT. Then-President Medvedev compared it to a declaration of war as the U.S. considered booting Russia out of the platform in 2014 for its annexation of Crimea.

Russia will also suffer from the move if it relies on oil and gas exports for 40% of its revenue. Although Russia and China have established alternative payment systems that Russia could utilize, the Atlantic Council notes they are significantly smaller than SWIFT and would not sufficiently compensate for being cut off.

One senior executive has compared SWIFT's removal of Russia to "opening Pandora's box," with the move hurting the EU's ability to pay for the imports of Russian gas and oil that it relies on.

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Swift Banking System - What is it and How it Works?

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In the era of global commerce, countries have sought safer and more secure ways to transfer funds between banks. Networks and intermediaries are often needed to ensure international transactions are executed smoothly. SWIFT Banking System is the name of the organization that facilitates worldwide interbank financial communications.

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https://economictimes.indiatimes.com/news/international/business/could-russia-be-frozen-out-of-international-payments/articleshow/89809241.cms

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Could Russia be frozen out of international payments network SWIFT?

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If SWIFT were to exclude Russian banks, it would restrict the country’s access to financial markets across the world.

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https://themalaysianreserve.com/2020/01/20/bank-islam-implements-swift-gpi-service/

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https://www.fin.do/blog/62_swift-transfers-explained

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The Society for Worldwide Interbank Financial Telecommunications, commonly known as SWIFT, provides a secure, standardized network environment that allows financial institutions worldwide to exchange information about financial transactions.

With more than 35 million transactions carried out through its network every day, SWIFT is one of the most common ways to transfer money internationally.

But how does SWIFT work behind the scenes and, more importantly, is it the best way for you to send money abroad? In this article, we explore what SWIFT is, its pros and cons, and better alternatives for international money transfers.

A SWIFT transfer is an international money transfer done via the SWIFT network. SWIFT Payment is the acronym of the Society for Worldwide Interbank Financial Telecommunication.

The network has more than 11,000 member institutions worldwide, such as banks and other financial organizations like exchanges or clearinghouses.

Having been around for the past 50 years, SWIFT has become the standard way to move money between banks anywhere in the world.

So how does a SWIFT transfer work?

SWIFT functions as a messaging network, in the sense that banks ‘communicate’ payment instructions or orders between bank accounts rather than delivering actual funds.

These payment orders are sent using standardized codes (SWIFT codes) which ensure that your money gets to the right destination. As you may have noticed, you are asked for this code every time you make a money transfer overseas.

A SWIFT code (also called a BIC code) is unique to each financial organization and contains 8 or 11 characters identifying:

The institution (for example RZBR for Raiffeisen Bank)

The country (for example IT for Italy)

The city or location (for example MM for Milan)

Optionally, the branch (XXX)

When the sender and recipient banks have a commercial relationship with one another, money gets delivered as soon as the destination bank receives the SWIFT message from the sending bank.

But if the two banks do not have a direct agreement, one or several intermediary banks will facilitate the process, adding to the cost and time of the transfer.

Since SWIFT is used for cross-border payments, the original currency has to be converted to the destination currency; one of the banks involved will usually do the currency exchange. Depending on the sender and destination currencies, a double currency conversion may take place.

How long does a SWIFT payment take?

Once the transfer is initiated, a SWIFT payment can take anywhere between 1 to 5 working days to complete.

One of the main reasons for the slow transfer of funds via SWIFT are the fraud prevention and anti money laundering (AML) procedures in place by the banks involved in the transaction.

Another factor is that when the sender and recipient banks do not have a direct agreement, intermediary banks will prolong the process.

Then, bank holidays, weekends, and schedules can also impact the duration of the transfer processing.

What information do you need to make a SWIFT transfer?

To send an international SWIFT payment, you need to provide the following information:

Your recipient’s name and address

Name and address of the recipient’s bank

Recipient’s account number (IBAN)

BIC or SWIFT code of the recipient’s bank

How safe are SWIFT payments?

SWIFT has been around for over four decades and has become the norm for secure international money transactions.

This is due to the fact that the SWIFT network simply communicates encrypted money transfer instructions between banks or financial institutions instead of actually moving funds from one place to another.

As such, during a SWIFT money transfer money is only handled by the banks involved in the transaction, making it a highly safe and secure way of sending money overseas.

SWIFT transfers step by step

Making a SWIFT money transfer requires a few steps:

1. Verify your identity

You can make a bank transfer online from your internet banking account or from your bank’s online wire transfer option. You’ll need to log in or confirm your identity to avoid any fraud.

2. Make sure you have enough funds

Make sure you have enough money in your account to avoid your bank declining your payment due to insufficient funds.

3. Check the exchange rate

Exchange rates vary slightly from one money transfer service and one bank to another. Be sure to check that the rate your bank offers is within your range and whether you’ll be charged an extra fee for the currency conversion.

4. Confirm your transfer

If you agree to the exchange rate, you can go ahead and confirm the payment.

5. Your money is delivered

Your funds will be converted and received by your recipient in their bank account’s currency, at the exchange rate agreed.

How much does a SWIFT transfer cost?

SWIFT transfers are among the most expensive ways to move funds from one bank account to another.

The costs include:

The bank’s transfer fee (usually a % of the transaction value)

Currency exchange (banks will often quote poor exchange rates to inflate the total costs for a transfer)

Possibly double currency conversion, currency exchange charges, or other ‘hidden’ fees

Exchange rates between any two currencies vary between banks, and they also change on a daily basis.

Pros and cons of SWIFT payments

Main Benefits:

1. As an established payment method, SWIFT transfers are subject to rigorous anti-fraud and anti-money laundering verifications, which helps keep your bank account and transactions secure.

2. SWIFT is used in more than 200 countries by over 11,000 organizations, which makes it widely available for money transfers between almost any two countries.

There are downsides to SWIFT transfers:

1. First, the rather complicated mechanism makes transfers slow, with up to 5 working days needed to complete a transaction. Delays can be even longer depending on the destination, bank cut-off times, and agreements between banks.

2. Secondly, SWIFT money transfers are pretty expensive. If an intermediary bank is needed to complete the process, additional fees will be added to the total cost of your transfer.

3. And last but not least, sending money overseas using SWIFT is not plain sailing. You are required to input a lot of information including the name and address of the recipient, the name of the bank, the SWIFT or BIC code, and the recipient’s IBAN (bank account) number.

Is there a faster and cheaper way to send money overseas?

While there is no denying that in its early days SWIFT transformed international money transfers, solutions are available today that provide faster transfers and a better experience.

A fintech innovator, Fin.do is the easiest way to send and receive money worldwide, in seconds. Our platform enables instant money transfers in any currency, with no currency conversion fees.

With Fin.do you can transfer money using nothing but your smartphone, which increases the availability of money transfers and access to funds for people anywhere in the world.

Here is how Fin.do money transfers compare to SWIFT transfers:

| SWIFT network | Fin.do
Speed | 3 or more working days to complete | Transfers are delivered instantly
Currency conversion | Double currency conversion depending on the currencies involved | Direct currency conversion between any two currencies with no extra fees
Recipient information | Complex recipient details required (including IBAN) | Send money to contact or to a card number
Fees | Fees can be shared between sender and recipient | One unique fee, shown to the sender upfront
Transparency | Complex routing of money between banks | Money is sent from card to card and ready to use in seconds

If you’d like to see how fast Fin.do transfers are compared to international bank transfers, get the app with no monthly charges and no hidden fees.

We hope you found this tour interesting! And remember: your next international money transfer CAN be instant, easy, and secure!

Happy transfers!

Frequently asked questions about SWIFT:

Who uses SWIFT?

SWIFT’s global financial infrastructure is adopted and used by many types of institutions across financial and capital markets, including banks, exchanges, depositories, brokerages, currency exchanges, securities dealers, and asset management organizations.

What do I need to receive SWIFT transfers?

A SWIFT transaction is initiated by the sender. You’ll have to provide your sender with details including your name, your account number (IBAN), your address, your bank’s name, and the SWIFT or BIC code of your bank.

If you don’t know your bank’s SWIFT/BIC code, you can obtain this information from your bank or their website.

How do I send SWIFT transfers?

To make a SWIFT transfer overseas, you need to enter your recipient’s information (their name, address, their bank’s name, and address, the recipient’s bank account number, and their bank’s SWIFT/BIC code), the amount you want to send, and confirm your payment.

Note that a BIC/SWIFT code is mandatory for any international transaction except for the SEPA zone.

If you send euros between EU countries in the SEPA network, your transfer will be processed within 1 working day and you don’t need a BIC or SWIFT code. You’ll still need the recipient’s IBAN or bank number.

How do I track a SWIFT transfer?

SWIFT’s gpi tracker enables banks to track their SWIFT transfers at all times using a unique transaction reference included in each payment. You should be able to find out whether the money has been deposited into the recipient's account from your bank.

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SWIFT Transfer Explained: What is it and how long does it take?

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What is a SWIFT payment and how does it work in 2022? In this article, we will explain international SWIFT transfers for personal and business users.

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https://www.bbc.com/news/business-60521822

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By Russell Hotten
BBC News

The European Commission has proposed excluding three more Russian banks from Swift, an international payment system used by thousands of financial institutions.

It comes after the EU and its allies suspended seven institutions from the system in March.

The move aims to hit the country's banking network and its access to funds via Swift, which is pivotal for the smooth transaction of money worldwide.

What is Swift?

Swift is the global financial artery that allows the smooth and rapid transfer of money across borders. It stands for Society for Worldwide Interbank Financial Telecommunication.

Created in 1973 and based in Belgium, Swift links 11,000 banks and institutions in more than 200 countries.

But Swift is not your traditional High Street bank. It is a sort of instant messaging system that informs users when payments have been sent and arrived.

It sends more than 40 million messages a day, as trillions of dollars change hands between companies and governments.

More than 1% of those messages were thought to involve Russian payments.

How will banning Russia from Swift affect it?

In March, seven Russian banks were removed from Swift including Bank Otkritie, Novikombank, Promsvyazbank, Bank Rossiya, Sovcombank, Vnesheconombank (VEB) and VTB Bank.

The European Commission now wants to exclude a further three including the country's biggest lender, Sberbank, which accounts for more than a third of Russia's banking sector.

The package still has to be approved by EU ambassadors and is set to be signed off in the next few days.

The EU, US, UK and others have said that cutting banks out of Swift will ensure they "are disconnected from the international financial system and harm their ability to operate globally".

The aim is for Russian companies to lose access to the normal smooth and instant transactions provided by Swift, disrupting payments for its valuable energy and agricultural exports.

Banks now have to deal directly with one another, adding delays and extra costs, and ultimately cutting off revenues for the Russian government.

Russia was threatened with a Swift expulsion before - in 2014 when it annexed Crimea. Russia said the move would be tantamount to a declaration of war.

Western allies did not go ahead, but the threat did prompt Russia to develop its own, very fledgling, cross-border transfer system called the System for Transfer of Financial Messages (SPFS) as an alternative to Swift.

Few foreign countries currently use SPFS, but India is reportedly considering a Russian proposal to use it for payments in roubles.

Separately, Moscow is working with Beijing to connect to China's Cross-Border Interbank Payment System (CIPS) - another alternative to Swift which processes payments in Chinese yuan.

Why was the West divided over Swift?

Some nations - such as Germany, France and Italy - were initially reluctant to take action against Russia's use of Swift.

There were concerns that companies owed money by Russia would have to find alternative ways to get paid.

There were also fears it could impact the global banking system, although there is no evidence of this yet.

Alexei Kudrin, Russia's former finance minister, has suggested being cut off from Swift could shrink Russia's economy by 5%.

However, there are doubts about the lasting impact on Russia's economy, particularly if banks find sustainable ways to reroute payments via countries that have not imposed sanctions.

Who owns and controls Swift?

Swift was created by American and European banks, which did not want a single institution developing their own system and having a monopoly.

The network is now jointly-owned by more than 2,000 banks and financial institutions.

It is overseen by the National Bank of Belgium, in partnership with major central banks around the world - including the US Federal Reserve and the Bank of England.

Swift helps make secure international trade possible for its members, and is not supposed to take sides in disputes.

However, Iran was banned from Swift in 2012, as part of sanctions over its nuclear programme. It lost almost half of its oil export revenues and 30% of foreign trade.

Swift says it has no influence over sanctions and any decision to impose them rests with governments.

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Ukraine conflict: What is Swift and why is banning Russia so significant?

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By Russell Hotten BBC News The European Commission has proposed excluding three more Russian banks from Swift, an international payment system used by thousands of financial institutions. It comes after the EU and its allies suspended seven institutions from the system in March.

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https://analyticsindiamag.com/how-does-the-swift-payment-network-use-ai/

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Acting on the sanctions, the European countries and the US have unanimously imposed a ban on leading Russian banks from the international payment network SWIFT following the invasion of Russia on Ukraine. The ban means Russia would be in a major economic disruption as it cannot access the global financial market. This means business establishments and firms in Russia will be prohibited from importing or exporting or making any monetary exchange; there will also be restrictions in making any investments or borrowing outside Russia.

So, what is SWIFT?

THE BELAMY

Sign up for your weekly dose of what's up in emerging technology.

Society for Worldwide Interbank Financial Telecommunication (SWIFT) is a safe and secure international messaging network that banks from many countries use to make payments from one country to another. This global network connects banks to communicate messages about securely transferring funds using a code. SWIFT was founded in 1973 by a Belgium-based society to facilitate financial and banking institutions to wire money to each other so that global trade could carry on easily and smoothly. SWIFT was set up out of fear that a single private and fully American entity Citibank, formerly First National City Bank, might control the global financial flows.

11,000 banking institutions use SWIFT

About 11,000 members (banking institutions) spread across 200 countries use SWIFT to send nearly 33.6 million transactions every day. In 2020, about 40 million messages with instructions to send trillions of dollars were sent each day over the platform. The banks find SWIFT transactions very safe as the messages are delivered over the network; these messages also help the banking system to honour the payment instructions swiftly.

Three data centres

Three data centres run the secure messaging network of SWIFT, located in the US, the Netherlands and Switzerland; a command and control centre is located in Hong Kong. These data centres share information in near real-time; however, if there are any lapses reported from any of the data centres, another centre can handle the transaction traffic. SWIFT uses submarine communications cables to transmit its data.

SWIFT currently provides services to financial institutions, including banks, exchanges, depositories, brokerages, asset management organisations, currency exchanges, security dealers and corporate treasuries.

The technology used by SWIFT

According to Crunchbase, SWIFT uses about 19 technology products and services for their smooth transactions, including HTML5, Google Analytics, and jQuery. About 61 technologies are used for SWIFT’s website, including Viewport Meta, IPhone/Mobile Compatible, and SPF.

How is SWIFT using AI?

SWIFT offers its community a platform for messaging, standards for communicating, and value-added products and services for which AI technologies are used to enhance the quality.

AI for Reference Data is used to

– Re-structure data files that come from various sources worldwide

– Improve local language translations

– Clean data and provide missing data elements

For example, today, there is a lack of quality in the address field for some countries. SWIFT uses ML to structure that data better and improve the translation for enhanced data quality.

AI for Standards is used to

– Facilitate the migration to ISO 20022

– Investigate the logic and the pattern among different standards

– Validate new standards

For example, SWIFT performs AI research on different financial messaging standards to facilitate and automate the migration from any financial messaging standards to ISO 20022.

AI for Financial Crime compliance is used to

– Tune and improve fraud detection rules

– Identify uncharacteristic business relationships

– Optimise effectiveness and reduce false-positive cases

For example, SWIFT performs AI research for payment control solutions to derive a personalised payment rule for each customer automatically.

AI for Business Intelligence is used to

– Improve data quality

– Enhance products

– Perform profiling and peer group comparison for anomaly detection

For example, for SWIFT GPI, SWIFT performs AI research to determine the quickest, cheapest and most effective route that payment can take.

Although SWIFT has leveraged AI at various stages of their transactions, from messaging to fraud detection rules and detecting anomalous activities in financial SWIFT transactions using ML and behavioural analytics, it is only recently that SWIFT has announced a new AI platform. SWIFT is now leveraging a pivotal role in the financial industry to develop transformative AI solutions by enabling a high-performance AI platform that is future-ready for hybrid cloud.

Transformational AI

At Sibos 2021, Tom Zschach, chief innovation officer at SWIFT, said, “We see that the use of AI and predictive analytics is the key to delivering our strategy, which includes instant and frictionless payments. We are now focusing on building on AI and ML solutions to enhance our existing products. We are rolling out an enterprise-scale AI platform at SWIFT along with our technology partners. Red Hat will help us with the container platform. Kove, a software company, has given us software-defined memory, and C3.AI has given data ops, for machine learning ops and DevOps.”

In December 2021, at the AI Summit in New York, Red Hat and SWIFT presented details about using AI/ML and containers in the financial services industry. As the financial industry’s neutral and trusted provider, SWIFT is helping the community of over 11,000 financial institutions move value around the world reliably and securely at scale.

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How does the SWIFT payment network use AI?

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SWIFT is now leveraging transformative AI solutions by enabling a high-performance AI platform that is future-ready for hybrid cloud.

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https://statrys.com/blog/swift-payment-what-it-is-and-how-it-works

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Statrys * SWIFT Payment: What is it and How Does it Work?

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This is just one of the stories from our "I've Always Wondered" series, where we tackle all of your questions about the world of business, no matter how big or small. Ever wondered if recycling is worth it What is the SWIFT banking system? How would countries remove Russia from it? What effect would that have? ? Or how store brands stack up against name brands? Check out more from the series here.
Listener Jared Evans asks:

The European Union announced Wednesday that it will bar seven key Russian banks from using the SWIFT financial messaging system and may exclude more depending on Russia's future actions.

SWIFT, which stands for the Society for Worldwide Interbank Financial Telecommunication, allows banks to relay information about financial transactions to one another.

The Russian banks, including Bank Otkritie, Bank Rossiya, Novikombank and VTB Bank, will be barred from SWIFT as of March 12.

Russia launched its full-scale invasion of Ukraine last week, leading to at least 227 civilian deaths and prompting 1 million people to flee the country. In response, nations around the world have imposed sanctions against the country.

Investments in projects co-financed by the Russian Direct Investment Fund will also be banned, and euro banknotes will not be provided to Russia, according to the EU. The RDIF is a sovereign wealth fund, although the U.S. Treasury Department says it's "considered a slush fund for President Vladimir Putin and is emblematic of Russia's broader kleptocracy."

The EU said the sanctions it's taken against Russia, which include the SWIFT ban, will lead to "massive and severe consequences" for the country.

How does SWIFT work?

SWIFT, headquartered in Belgium, went live in 1977 and replaced telex machines, noisy typewriter-like devices that used phone circuits to send written messages.

Now, more than 11,000 financial institutions across more than 200 countries and territories use SWIFT. Last year, an average of 42 million SWIFT messages were sent per day.

Banks in the SWIFT system have a code or number, made up of 8 to 11 characters, that identifies who they are.

As the payment operations platform Modern Treasury explains it: Say you want to send a wire transfer through SWIFT to someone living in Tokyo. To make that payment, you'll need a slew of information, including the amount being sent and the Japanese bank's SWIFT code. Your bank will send that information, and once the receiving bank gets that information, it will deposit the money.

"Later, the two institutions will settle the payment, which means they'll adjust the account balances to reflect the transfer," Modern Treasury says.

It is not a system that clears trades, said Paolo Pasquariello, a finance professor at the University of Michigan.

"It is just a system by which financial institutions communicate with each other," Pasquariello explained.

However, he said SWIFT is important because when banks are transferring money to other banks, they need to communicate to the other party with certainty about the amounts being sent (along with other pertinent information).

SWIFT is used for 70% of transfers in Russia, according to Reuters.

"The fact that these [Russian] banks now are excluded from SWIFT means that these banks cannot use this almost instantaneous communication device in order to talk to banks outside of Russia," Pasquariello said.

What effect will the SWIFT ban have?

Experts say transactions will become more difficult, but they won't be impossible.

Randall Henning, a professor of international economic relations at American University, said that this ban does not mean that Russian banks are barred from "accessing international markets or dealing with Western banks."

But what this will do, he explained, is raise the cost and increase the time involved in making these transactions.

Pasquariello and Henning said banks can still pick up the phone or send a fax, but that comes with complications.

For example, "now you have to pick up the phone and somebody with an Italian accent has to speak English with somebody with a Russian accent," Pasquariello said.

This turns what was "a near-frictionless transaction" into one with the potential for misunderstandings, errors and delays, he added.

Pasquariello said before he became a professor, he worked in finance, and every time he made a trade, his phone calls with brokers and dealers had to be taped.

"Lawyers on either side had to listen to my weird conversations over the phone when I spoke English with an Italian accent," he said.

Pasquariello said they were confirming information like the price that they had agreed upon.

"SWIFT makes sure that this information is quickly and precisely communicated to both parties" he noted.

Some banks will not be banned from SWIFT

Reuters reported that the EU's SWIFT sanctions will not apply to banks that handle energy payments, a decision that has received backlash from government leaders such as Polish Prime Minister Mateusz Morawiecki.

"As Poland, we demand that all Russian entities, thanks to which Russia finances the war in Ukraine, be effectively and fully covered by sanctions," Morawiecki said on Facebook.

Henning explained that Western Europe isn't willing to do this now because of its reliance on Russian natural gas and oil.

"Once they have made ... changes to energy policy and found alternative sources for energy, then they can begin to ratchet back their dependence on Russian oil and gas," Henning said.

More than 40% of the EU's natural gas supply comes from Russia.

"The reality is that it's really difficult to overhaul an energy system overnight. You just can't," Nikos Tsafos with the Center for Strategic and International Studies told Marketplace last week.

Pasquariello said that the EU does "not want to use all the financial weapons at their disposal" in one fell swoop, although it may ban these banks from using SWIFT in the future.

Does Russia have a workaround for SWIFT?

This week, the Central Bank of Russia said it will replace SWIFT with its System for Transfer of Financial Messages, or SPFS, established in 2014.

"It remains to be seen whether this is a solution to their problem or not. It's unlikely to reduce the cost of dealing with Western banks and other institutions," Henning said.

Marketplace reported that China's cross-border interbank payment system, also known as CIPS, is one potential alternative to the SWIFT global payments system.
There's a lot happening in the world. Through it all, Marketplace is here for you.
"China's CIPS connects participants inside China and out to do trade or investment, and then settles those transactions using Chinese yuan," explained Marketplace China correspondent Jennifer Pak.

However, Pak said that while "it's feasible in theory," it's not in practice - yet. That's partly because the Chinese currency isn't as popular as other currencies. In January, only 3% of global payments on the SWIFT network were in Chinese yuan.

Other sanctions include a freeze on assets from Russia's central bank held in the United States and a ban on technological exports to Russia.

We're already starting to see the effects of these sanctions. The Russian ruble's value has declined to a record low, while people in the country have rushed to ATMs to withdraw money.

Pasquariello pointed out that while some financial institutions can technically still do business with their Russian counterparts, even though they've been cut off from SWIFT, they may be reluctant to anyway.

"Whether it's via phone or via fax," he said.

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What exactly is the SWIFT banking system?

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This is just one of the stories from our "I've Always Wondered" series, where we tackle all of your questions about the world of business, no matter how big or small. Ever wondered if recycling is worth it What is the SWIFT banking system? How would countries remove Russia from it?

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SWIFT for Electronic Funds Transfers

Need to transfer money overseas? Today, it is easy to walk into a bank and transfer money anywhere around the globe, but how does this happen? Behind most international money and security transfers is the Society for Worldwide Interbank Financial Telecommunications (SWIFT) system. SWIFT is a vast messaging network banks and other financial institutions use to quickly, accurately, and securely send and receive information, such as money transfer instructions.

More than 11,000 global SWIFT member institutions sent an average of 42 million messages per day through the network in 2021, marking an increase of 11.4% over 2020.

In this article, we explore what SWIFT does, how it works, and how it makes money.

Inside a SWIFT Transaction

SWIFT is a messaging network that financial institutions use to securely transmit information and instructions through a standardized system of codes. Although SWIFT has become a crucial part of global financial infrastructure, it is not a financial institution itself: SWIFT does not hold or transfer assets. Rather, its utility lies in its power to facilitate secure, efficient communication between member institutions.

SWIFT assigns each financial organization a unique code that has either eight characters or 11 characters. The code is interchangeably called the bank identifier code (BIC), SWIFT code, SWIFT ID, or ISO 9362 code. To understand how the code is assigned, let's look at Italian bank UniCredit Banca, headquartered in Milan. It has the eight-character SWIFT code UNCRITMM.

First four characters: the institute code (UNCR for UniCredit Banca)

Next two characters: the country code (IT for the country Italy)

Next two characters: the location/city code (MM for Milan)

Last three characters: optional, but organizations use them to assign codes to individual branches.

Let's assume a Bank of America Corp. ( BAC) branch customer in New York wants to send money to their friend who banks at the UniCredit Banca branch in Venice. The New York customer can walk into their Bank of America branch with their friend's account number and UniCredit Banca's unique SWIFT code for its Venice branch.

Bank of America will send a payment transfer SWIFT message to the UniCredit Banca branch over the secure SWIFT network. When Unicredit Banca receives the SWIFT message about the incoming payment, it will clear and credit the money to the Italian friend's account.

As powerful as SWIFT is, keep in mind that it is only a messaging system. SWIFT does not hold any funds or securities, nor does it manage client accounts.

The World Before SWIFT

Prior to SWIFT, telex was the only available means of message confirmation for international funds transfer. Telex was hampered by low speed, security concerns, and a free message format. In other words, Telex did not have a unified system of codes like SWIFT to name banks and describe transactions. Telex senders had to describe every transaction in sentences that were then interpreted and executed by the receiver. This led to many human errors, as well as slower processing times.

To circumvent these problems, the SWIFT system was formed in 1973. Six major international banks formed a cooperative society to operate a global network that would transfer financial messages in a secure and timely manner.

Why Is SWIFT Dominant?

According to the London School of Economics, "Support for a shared network...began to achieve institutional form...in the late 1960s, when the Société Financière Européenne (SFE, a consortium of six major banks based in Luxembourg and Paris), initiated a 'message-switching project.'"

SWIFT was then founded in 1973 with 239 banks in 15 countries. By 1977, it expanded to 518 institutions in 22 countries. In 2022, there were more than 11,000 institutional members hailing from more than 200 countries and territories.

Although there are other message services like Fedwire, Ripple, and Clearing House Interbank Payments System (CHIPS), SWIFT continues to retain its dominant position in the market. Its success may be attributed to how it continually adds new message codes to transmit different financial transactions and to the security of its platform.

Though SWIFT primarily started for simple payment instructions, it now sends messages for a wide variety of actions, including security transactions, treasury transactions, trade transactions, and system transactions. In Swift's latest report, from January 2022, data showed 44.5% of SWIFT traffic is still for payment-based messages, while 50.6% represents security transactions, and the remaining traffic flows to Treasury, trade, and system transactions.

Who Uses SWIFT?

In the beginning, SWIFT founders designed the network to facilitate communication about Treasury and correspondent transactions only. The robustness of the message format design allowed for the huge scalability through which SWIFT gradually expanded to provide services to the following:

Banks

Brokerage institutes and trading houses

Securities dealers

Asset management companies

Clearinghouses

Depositories

Exchanges

Corporate business houses

Treasury market participants and service providers

Foreign exchange and money brokers

Services SWIFT Offers

The SWIFT system offers many services that assist businesses and individuals to complete seamless and accurate business transactions. Some of the services offered are listed below.

Applications

SWIFT connections enable access to a variety of applications, which include real-time instruction matching for treasury and forex transactions, banking market infrastructure for processing payment instructions between banks, and securities market infrastructure for processing clearing and settlement instructions for payments, securities, forex, and derivatives transactions.

Business intelligence

SWIFT has recently introduced dashboards and reporting utilities that enable its clients to get a dynamic, real-time view of monitoring the messages, activity, trade flow, and reporting. The reports enable filtering based on region, country, message types, and related parameters.

Compliance services

Aimed at services around financial crime compliance, SWIFT offers reporting and utilities for Know Your Customer (KYC), sanctions, and anti-money laundering (AML).

Messaging, connectivity, and software solutions

The core of the SWIFT business resides in providing a secure, reliable, and scalable network for the smooth movement of messages. Through its various messaging hubs, software, and network connections, SWIFT offers multiple products and services that enable its end clients to send and receive transactional messages.

How Does SWIFT Make Money?

SWIFT is a cooperative organization owned by its members. Members are categorized into classes based on share ownership. All members pay a one-time joining fee plus annual support charges that vary by member classes.

SWIFT also charges users for each message based on message type and length. These charges also vary depending upon the bank's usage volume; different charge tiers exist for banks that generate different volumes of messages.

In addition, SWIFT has launched additional services as described above. These are backed by the long history of data maintained by SWIFT. These include business intelligence, reference data, and compliance services and offer SWIFT other income streams.

Challenges for SWIFT

The majority of SWIFT clients process huge transactional volumes for which manual entry of instructions is not practical. The need for the automation of SWIFT message creation, processing, and transmission is growing. However, this comes at a cost and increased operational overhead.

Although SWIFT has been successful in providing software for automation, that too comes at a cost. SWIFT may need to tap into these problem areas for the majority of its client base. Automated solutions within this space may bring in a new stream of income for SWIFT and keep clients engaged in the long run.

SWIFT and Sanctions

Because of their reliance on SWIFT to conduct fast, seamless, secure communication, countries around the world have an incentive to remain in good standing with the organization. SWIFT is overseen by central banks from Group of Ten (G10) countries, but it is a neutral organization operating for the benefit of all of its members.

In recent years, the possible use of SWIFT membership as a potential sanction against members has emerged multiple times. In 2012, for example, the European Union passed a sanction against Iran that compelled SWIFT to disconnect sanctioned Iranian banks. And in 2022, leaders from the U.K., EU, U.S., and Canada announced selected banks in Russia would be disconnected from SWIFT over its invasion of Ukraine.

In a nutshell, what is SWIFT?

Was Russia disconnected from SWIFT due to its invasion of Ukraine?

How important is SWIFT to global finance?

The Bottom Line

SWIFT has retained its dominant position in the global processing of transactional messages. It has recently forayed into other areas, such as offering reporting utilities and data for business intelligence, which indicates its willingness to remain innovative. In the short- to midterm, SWIFT seems poised to continue dominating the market.

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Need to transfer money overseas? Today, it is easy to walk into a bank and transfer money anywhere around the globe, but how does this happen? Behind most international money and security transfers is the Society for Worldwide Interbank Financial Telecommunications (SWIFT) system.

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https://tipalti.com/swift-payments/

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As global commerce evolves, countries have searched for a safe and secure means to get money from one bank to the next. International transactions often require a network or intermediary institution to ensure everything goes smoothly. In Europe, it's called the Society for Worldwide Interbank Financial Telecommunications, otherwise known as SWIFT.

What are SWIFT Payments?

SWIFT payments are payment transactions using the SWIFT international payment network. This network is used to send or receive international electronic payments, which is why SWIFT payments are sometimes referred to as international wire payments. The SWIFT network doesn't actually transfer funds but instead, sends payment orders between banks using SWIFT codes. It's a means to transfer money overseas quickly, accurately, and securely.

In 2019, more than 11,000 SWIFT member institution s sent approximately 33.6 million transactions per day through the network. The financial service creates a global level of connectivity that speeds up international business and brings the world a little closer together.

The SWIFT payment network allows individuals and businesses to accept/send international money via electronic or credit card payments. This can be done even if the customer or vendor uses a different bank than the payee. The network is a place for secure financial messaging. In a sense, it's nothing more than a messenger between banks.

What is a SWIFT Code?

When you use SWIFT, you are not actually sending a money transfer. Instead, it is referred to as a "payment order" between two banks. This is done using a SWIFT code.

It was the SWIFT network that standardized the formats for IBAN (international bank account numbers) and BIC ( bank identifier codes). SWIFT owns and administers the BIC system. This means it can identify a bank in seconds and send a secure payment quickly.

A unique SWIFT code is comprised of 8 or 11 characters. Other names for this same code include:

* Bank identifier code (BIC)
* SWIFT ID
* ISO9362
Example of a Swift Code
An example of a SWIFT code is the Italian bank UniCredit Banca in the city of Milan. The code is UNICRITMM.

The first four characters (UNCR) is the bank code. The next two characters (IT) is the country code for Italy. Then the next two characters (MM) stand for the bank's location or city code. The last three characters (which you do not see here) are optional. They are only used by banks to assign codes to individual branches.
Using a SWIFT Code
An example of this in action would be when a customer walks into a Bank of America in New York and wants to send money to their friend in Venice through UniCredit Banca. They need their friend's bank account number and the unique BIC code that applies not only to UniCredit Banca, but to the exact branch in Venice.

Bank of America will then send a SWIFT message to UniCredit Banca over the secure SWIFT network. Once the Italian bank gets the message, it will clear and credit the money to the Italian friend, while Bank of America debits the customer's account.

How Does a SWIFT Payment Work?

The original design and intent for SWIFT was to create a way for banks to communicate faster and more securely among themselves. Particularly in relation to processing international payments. The word "communicate" is always used because SWIFT is simply a messenger between banks. It channels the message enclosing payment instructions from the issuing bank (i.e. the payor) to the remitting bank (i.e. the beneficiary/receiver).

All banks engaged in a SWIFT transfer will move funds from one account to another based on an underlying network of Nostro and Vostro accounts. This refers to accounts that banks have opened up with each other for the sole purpose of executing SWIFT transactions.
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The Nostro and Vostro Accounts

As both banks keep a record of money deposited into the account, this leads to two mirroring sets of ledger known as the Nostro and Vostro accounts. Nostro refers to the account used by the bank to hold money, whereas Vostro refers to the name of the account used by the bank opening it in their books.

When both banks have a commercial relationship with Nostro and Vostro accounts, the SWIFT transfers are direct and immediate. When banks do not have this type of relationship, the SWIFT network has to determine the best means to pass the message on. In this case, a third-party is required, also known as an intermediary bank.

You have to find a middle-man to handle the transaction. Once a correspondent bank that has a commercial relationship between the two financial institutions is found, the SWIFT transaction can proceed. In this case, additional fees will be incurred from the third-party services. The more intermediary banks involved in the transaction, the more it will cost you to send. It will also take longer to send the payment, at a much higher risk, as there are more parties involved.

Who Uses SWIFT Payments?

In the beginning, SWIFT was created to facilitate communication about treasury and correspondent transactions only. The functionality of the message format design allowed for large scalability. SWIFT gradually expanded to provide services for:

* Banks
* Clearing systems
* Money brokers and security broker dealers
* Corporates
* Non-bank financial institutions
* Treasury market participants
* Asset management companies * Depositories
* Foreign exchange
* And more...

How Much Does SWIFT Cost?

SWIFT is a cooperative society that is owned by members. These members are categorized into classes based on the share of ownership. All members pay a one-time fee plus annual charges which vary by member classes.

In addition, the messaging system makes money by charging users on message type and length. These charges will vary based on the bank's usage volume. This explains why you pay different fees for international payments from one bank to the next. Another reason is the bank's commercial policy on an international funds transfer.

SWIFT also charges for extra services like business intelligence, professional apps, global payments innovations, and compliance.

What is the SWIFT Payment System?

SWIFT (Society for Worldwide Interbank Financial Telecommunications) is a payment system that allows banks across the globe to send messages and communicate securely and instantly about cross-border payments. Any SWIFT payment is part of the SWIFT payment system, which includes roughly 11,000 member banks across 200 countries.

Prior to the development of the SWIFT network, banks relied on a system called TELEX to send wire transfers. Not only did the process move at a snail's pace, but TELEX lacked the security and sophistication for a time when technology was making exponential progress. The free message format did not have a unified set of codes (like SWIFT) to name banks and transaction types. This created a lot of confusion and led to many human errors. TELEX senders had to describe every transaction in full sentences, which was then interpreted and executed by a dedicated receiver.

Therefore, as necessity is the mother of invention, the SWIFT network was born.

SWIFT is a member-owned organization. It was founded in Brussels in 1973 for the purpose of establishing common processes and standards for financial transactions. Banks needed a universal and consistent way to get money across the oceans. That's where the SWIFT network comes in. Six major international banks formed a cooperative society to operate the global network in a secure and timely manner.

Currently, SWIFT provides messaging services to over 10,000 financial institutions in 212 different countries worldwide and helps facilitate global business.

While the network started primarily for simple financial messages and payment instructions, it now sends reference data for a wide range of actions. This includes transactions for:

Almost 50% of SWIFT messages are still payment-based, 47% are for security transactions, and the remaining traffic is for trade, treasury, and system transactions.

The SWIFT system offers many services that will help you send seamless, international transactions. Here are a few to check out:

Industry-leading Applications

SWIFT connections give you access to a variety of applications from real-time instruction matching to forex transactions and treasury.

Expect applications that include tools for:

Banking market infrastructure for processing payments between banks

Securities market infrastructure for clearing and settlement instructions

Instructions for securities, forex, and derivatives transactions

Business Intelligence

SWIFT offers universal business intelligence dashboards and reporting utilities. This enables customers to get a dynamic, 360-degree view of messaging, activity, reporting, and trade flow. You can filter based on demographics like region, country, message types, and other related parameters.

Compliance Services

SWIFT offers services aimed at financial crime compliance. This includes reporting and utilities for Know Your Customer (KYC), Anti-Money Laundering (AML), and Sanctions.

SWIFT is the king of conversation and the entire focus is communication. The core of the business resides in streamlining the movement of messages and providing a safe, reliable, and secure network. SWIFT has a variety of messaging hubs and software so clients can effortlessly send and receive global transactional messages.

Global Payment Innovations

SWIFT's latest service is called SWIFT Global Payments Innovations (GPI). The goal of SWIFT GPI is to improve the traceability and transparency of all cross-border payments. This means, if your bank is a member of SWIFT, they can check on the status of a payment at any given time of day. This type of flexibility when it comes to international payment processing is unparalleled by any other system.

Although there are other real-time message services like Ripple, Fedwire, and Clearing House Interbank Payments Systems (CHIPS), SWIFT continues to retain a dominant position in capital markets. There's a good reason for that too. The attributed success is due to how continually the network adds new message codes to transmit different kinds of financial transactions. In other words, it's constantly adapting to new financial needs and fintech processes. This makes it the most reliable, flexible, and functional system for international wire transfers on the planet.

If your business is considering using SWIFT as a messaging network, understanding the process is a good first step!

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SWIFT Payments Explained - Paying by SWIFT | Tipalti

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The SWIFT payment network allows individuals and businesses to accept/send international money via electronic or credit card payments. This can be done even if the customer or vendor uses a different bank than the payee. The network is a place for secure financial messaging. In a sense, it's nothing more than a messenger between banks.

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Effective communication systems are the backbone of how the world stays connected, from mobile phones, email networks, to banks.

SWIFT - or the Society for Worldwide International Financial Telecommunications - is a system that banks use to securely send messages to each other. It is one of the key pillars of the financial world, connecting more than 11,000 member banks in some 200 countries and territories globally. Trillions of dollars'-worth of currency are sent across borders every single day - and it's largely thanks to the messages sent by SWIFT.

If you wish to transfer $1,000 from your bank in Singapore to your friend in the UK, you'll need a few key details; namely your friend's account number and his bank's SWIFT code. If the two banks have an account with each other, they authenticate the payment request, apply an exchange rate and the equivalent amount is deducted from your bank account for your friend to receive.

If the banks don't have a relationship, the message will be sent through intermediary banks, until the payment request is verified for your friend to receive his or her money.

"It's really about secure, automated payments," Alistair Milne, an economist at Loughborough University told CNBC. "This is so that everything integrates with the bank systems."

SWIFT has been thrown into the spotlight with the Russian invasion of Ukraine, after which numerous Russian and Belarusian banks were removed from the SWIFT network as part of economic sanctions. This essentially means those banks' ability to conduct financial transactions on an international scale has been disrupted.

However, SWIFT is not the only system for international transactions. Russia has its System for Transfer of Financial Messages or SPFS, serving 400 users as of February 2021. Twenty-three of the users were foreign banks.

The People's Bank of China also has the Cross-Border Interbank Payment System, or CIPS. By 2019, it reached more than 3,000 banks directly and indirectly, across 167 countries and regions.

Furthermore, alternative networks like cryptocurrencies and the blockchain are advancing.

Caroline Malcolm, who heads international policy at blockchain data company Chainanalysis, acknowledges that a legacy system like SWIFT is hard to detach from. "But there are certain capabilities and features in blockchain-based systems that can't be matched by traditional systems," she said in an interview with CNBC. "Blockchain allows people to hold their own funds and control that in a very direct way."

Watch the video above to find out more about the future of payments.

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How Russian banks got cut out of global finance: A 'SWIFT' system explainer

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Effective communication systems are the backbone of how the world stays connected, from mobile phones, email networks, to banks. SWIFT - or the Society for Worldwide International Financial Telecommunications - is a system that banks use to securely send messages to each other.

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https://www.finextra.com/newsarticle/38536/swift-takes-on-low-value-cross-border-payments

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Banking co-operative Swift is moving into the low value remittance market with the launch of Swift Go, a service that enables consumers and small businesses to send near real-time payments anywhere in the world direct from their bank accounts.

Seven global banks - BBVA; Bank of New York Mellon; DNB; MYBank; Sberbank; Société Générale, and UniCredit - which collectively handle 33 million low-value cross-border payments per year, are already live with the service.

Using tighter service level agreements between institutions and pre-validation of data, Swift Go enables banks to provide their end customers a fast and predictable payments experience with upfront visibility on processing times and costs.

Stephen Gilderdale, chief product officer, at Swift, says: “Swift Go is a direct response to the needs of small businesses and consumers for fast, easy, predictable, secure and competitively priced cross-border payments. Our new service will allow banks to compete effectively in one of the fastest growing segments of the payments market, delivering a seamless experience for their customers.”

Swift is promising competitive pricing, with processing fees agreed between financial institutions upfront in order to provide customers with full transparency on costs.

Pricing will be key if the correspondent banking industry is to snatch back business lost to a host of non-bank money transmitters, many of whom rely on Ripple's alternative payment rails to disburse funds.

Isabel Schmidt, head of direct clearing and asset account services products, Bank of New York Mellon, comments: “It’s no secret that for many years consumers and small businesses have been running into varying pain points when transacting international payments. These challenges have included opaque costs and lack of certainty on how quickly funds are delivered to the final beneficiary. This is why BNY Mellon is pleased to be the first US bank to go live with Swift Go, a new service that overcomes all of these challenges and assists financial institutions in delivering a competitive, seamless, fast and predictable payments experience to their customers.”

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https://perekaz24.eu/en/what-is-swift-money-transfer-and-its-disadvantages

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Перекази з картки на картку, отримання готівки в доларах США. Перекази в Україну з Польщі, Єврозони, Англії (Великобританії). Не вимагаємо жодних документів. Оплата картками VISA або MasterCard

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With the help of a SWIFT transfer, you can make transactions in any currency and to any bank in the world. However, its implementation takes longer than a regular online transfer, on average about 3 working days. It is not always possible to determine the cost of a transfer in advance, since it depends on how many banks will act as an intermediary in a particular transaction. And most importantly, SWIFT does not solve the problem of small transfers. As you can see, SWIFT transfers have disadvantages, which we will discuss in more detail in this article.

What Is SWIFT Transfer?

The term SWIFT Transfers comes from the name of the Society for Worldwide Interbank Financial Telecommunications, founded in 1973. Initially, it included more than 200 banks from 15 countries. The main purpose of its creation was mutual, close cooperation, and exchange of information between banks. Today, the SWIFT international payment system unites more than 8000 institutions from 208 countries. The Association acts as an intermediary in banking, brokerage, and stock transactions.

SWIFT payment is a transfer that will allow you to make a payment in any currency to any bank and country around the world. Also, a SWIFT transfer abroad is carried out in foreign currency. It is used to transfer money to countries outside the European Union, but that does not mean that you can not send funds between EU member states with the help of it.

Find out how to transfer funds using SWIFT step by step. You should submit the following information to the bank where you have an account:

personal data of the transfer recipient, that is, the person or institution to whom you intend to send money in foreign currency;

beneficiary's bank account number - required in IBAN format;

beneficiary's bank SWIFT code (BIC code);

purpose of transfer;

the amount of the transfer in the currency of sending or receiving.

A SWIFT code is an internationally unique alphanumeric code assigned to a specific banking institution, consisting of letters and numbers, 8 characters long, but you can also come across codes consisting of 11 characters. In the case of longer SWIFT codes, the last three additional characters are used to identify a specific bank branch. However, the SWIFT code mainly consists of the following:

The first four characters are the unique identifier of the banking institution.

Two consecutive characters are the country code according to the ISO 3166-1 standard.

The next two characters are the location code.

When transferring money in foreign currency, you must enter the SWIFT code. It is used to identify banks or other organizations that are members of the entire SWIFT system. This allows financial transactions to be carried out more efficiently and mainly automatically. The SWIFT code is required when transferring between two different countries.

SWIFT Payment Disadvantages

Making a money transfer takes a long time.

Standard SWIFT transfers are much slower than, for example, SEPA or Perekaz24. However, it does have the option of paid acceleration, which greatly increases its capabilities.

Standard (D + 2) - the money transfer is received two days after it was sent.

Urgent (D + 1) - the money transfer comes one day after it was sent.

Express (D + 0) - the transfer is carried out on the same day.

The high cost of money transfers.

We will literally have to pay a high price for the wide availability of SWIFT transfers. The cost here is incomparably higher and is most often defined as a percentage of the transfer amount, but with a minimum and maximum value. These values are set differently for each country.

In addition, there are costs of the so-called intermediary banks, which can amount to several tens or several hundred hryvnias or euros. Who pays this cost depends on the chosen split option (this decision always remains with the person who orders the transfer).

Thus, the fee is rather big for a SWIFT transfer; whereas using the Perekaz24 transfer system, you can make instant transfers for a small fixed fee, and make the first transfer absolutely free of charge.

What Else Should I Know About Currency Transfers?

OUR - all costs are covered by the sender of the transfer;

BEN - all costs are covered by the recipient of the transfer;

SHA - costs are divided between both parties: senders pay the fee of their bank, the remaining costs (the recipient's bank and intermediary banks fee) are covered by the recipient.

There are the following cost-sharing options:

Banks may charge a fee not only for sending but also for receiving a foreign transfer.

If the sender provides incorrect data for the transfer (and, thus, the transfer won't reach the recipient), he will be charged additional costs by banks to clarify the recipient's details.

If you want to send money within Poland, in this case, SWIFT transfers also have disadvantages. A transfer of foreign currency between two Polish banks is also considered a transfer abroad (this is especially important for SWIFT transfers - then the money goes through an intermediary bank outside Poland, and therefore there are additional costs).

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What Is SWIFT Money Transfer and Its Disadvantages - Perekaz24

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With the help of a SWIFT transfer, you can make transactions in any currency and to any bank in the world. However, its implementation takes longer than a regular online transfer, on average about 3 working days.

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https://apnews.com/article/what-is-swift-russia-financial-system-083a5935002c9d06ffd6ac39c13d3ce4

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WASHINGTON (AP) — U.S. and European officials are holding one key financial sanction against Russia in reserve, choosing not to boot Russia off SWIFT, the dominant system for global financial transactions.

The Russian invasion of Ukraine caused a barrage of new financial sanctions Thursday. The sanctions are meant to isolate, punish and impoverish Russia in the long term. President Joe Biden announced restrictions on exports to Russia and sanctions against Russian banks and state-controlled companies.

But Biden pointedly played down the need to block Russia from SWIFT, saying that while it’s “always” still an option, “right now that’s not the position that the rest of Europe wishes to take.” He also suggested the sanctions being put in place would have more teeth.

“The sanctions we’ve imposed exceed SWIFT,” Biden said in response to a question Thursday. “Let’s have a conversation in another month or so to see if they’re working.”

Still, some European leaders, including in the United Kingdom, favor taking the additional step of blocking Russia from SWIFT, the Belgium-headquartered consortium used by banks and other financial institutions that serves as a key communications line for commerce worldwide. The SWIFT system averaged 42 million messages daily last year to enable payments. The name is an acronym for the Society for Worldwide Interbank Financial Telecommunications, and about half of all high-value payments that cross national borders go through its platform.

Ukraine has sought for Russia to be excluded from SWIFT, but several European leaders would prefer to stay patient because a ban could make international trade more difficult and hurt their economies.

“A number of countries are hesitant since it has serious consequences for themselves,” said Dutch Prime Minister Mark Rutte, who believes a ban should be a last resort.

The British government says Prime Minister Boris Johnson pushed at a virtual meeting of the Group of Seven world leaders Thursday for Russia to be kicked out of SWIFT. It said there was “no pushback” but it was agreed that more discussion was needed. U.K. officials would not confirm Germany was resisting.

U.S. lawmakers have called on Biden to deploy every available financial sanction, with Senate Republican Leader Mitch McConnell saying Thursday that America should “ratchet the sanctions all the way up. Don’t hold any back. Every single available tough sanction should be employed and should be employed now.”

But Sen. Jim Risch of Idaho, the top Republican on the Senate Foreign Relations Committee, said the SWIFT ban would be complicated and time-consuming in part because the U.S. doesn’t have control over the decision.

The problem is that banning Russia from SWIFT might not cut it off from the global economy as cleanly as proponents think. Also, there could be blowback in the form of slower international growth. And rival messaging systems could gain users in ways that erode the power of the U.S. dollar — all of which has left SWIFT as a sanction waiting to be deployed.

“It’s a communications platform, not a financial payments system,” said Adam Smith, a lawyer who worked in the Obama administration. “If you remove Russia from SWIFT, you’re removing them from a key artery of finance, but they can use pre-SWIFT tools like telephone, telex or email to engage in bank-to-bank transactions.”

The other risk is that countries could migrate their institutions to platforms other than SWIFT, such as a system developed by China. This would increase the friction in global commerce — hurting growth — and make it harder to monitor the finances of terrorist groups.

“By politicizing SWIFT you give incentive for others to develop alternatives,” said Brian O’Toole, a senior fellow at the Atlantic Council and former Treasury official. “SWIFT also is an important partner in U.S.-European counterterrorism efforts. It shares data with U.S. Treasury related to counterterrorism issues that has proven to be enormously valuable.”

The sanctions announced Thursday would still accomplish much of what would happen if Russia lost access to SWIFT, said Clay Lowery of the Institute of International Finance.

“Cutting off these financial institutions from utilizing the dollar, euro, pound sterling is still a pretty significant step,” Lowery said. “You’re really having the same impact on certain subsections of the Russian economy through sanctions.”

Iran was blocked from the SWIFT system in 2014 because of its nuclear program. In 2019, then-Russian Prime Minister Dmitry Medvedev said losing access to SWIFT would be akin to a declaration of war against Russia. The statement by Medvedev is a sign that Russia viewed the platform as a vulnerability and developed workarounds to limit any economic damage.

“I think it will be harmful in the immediate term and psychological as well, but I’m not sure it’ll impact the economy in ways that make it worthwhile,” Smith said.

Russia has already prepared for ways to evade sanctions, including those imposed this week, experts say.

Ari Redbord, a former Treasury senior adviser, said he expects Russia’s leadership to bypass financial penalties that limit its ability to engage in the global financial system through the increased use of cryptocurrency.

He said this is a risk “especially when there are actors like Iran, China and North Korea” that will continue to trade with Russia outside of the formal financial system, Redbord said.

“If Russian banks are entirely cut off from the U.S. and European financial system, that will be very debilitating to those banks and the Russian economy,” he said. But the Russian government will use alternative means to trade with countries “even if there are debilitating” sanctions from the European Union and U.S.

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Associated Press writers Jill Lawless in London and Lisa Mascaro in Washington contributed to this report.

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Biden, Europe waiting on key SWIFT sanction against Russia

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WASHINGTON (AP) — U.S. and European officials are holding one key financial sanction against Russia in reserve, choosing not to boot Russia off SWIFT , the dominant system for global financial transactions.

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Remittances: Easy options for transferring money

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Remittances: Easy options for transferring money

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https://economictimes.indiatimes.com/nri/remittances-easy-options-for-transferring-money/slideshow/8342446.cms

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15 May 2011, 04:49 PM IST

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Remittances: Easy options for transferring money

Priya Kapoor, ET Bureau

What do you do if you get a frantic call from your daughter who is studying abroad and is in dire need of money? You can't simply courier wads of cash, can you? Under such circumstances, it's better to be prepared. Fortunately, there are various options to transfer money from India or receive it from a foreign country. Assess these options and decide which suits your needs the best.

According to the RBI guidelines, you can remit up to $1 lakh a year for your child's education, while under the Liberalised Remittance Scheme, you can transfer up to $2 lakh a year abroad for various purposes, such as investment, education and medical treatment. So, whether you need to send money to your child, gift it to friends and relatives, or buy goods and services from a foreign country, here's how you can do it.

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Foreign currency demand drafts

You can approach the bank where you have an account to make a demand draft (DD) for the amount you want to transfer. This will be made in the foreign currency and the equivalent amount of money in rupees will be debited from your account. Banks usually charge Rs 300-600 for making the draft.

While it doesn't take long to get the DD made, it will take 2-7 days to have the draft mailed abroad, and the courier charges will add to the cost. There's another downside to using this option. "Besides the risk of the draft getting lost in transit, there is the delay in realisation as the draft has to be first presented to the bank. So the entire process could take 10-12 days to deposit in the individual's account," says a bank executive.

A fast way to transfer money is through a mechanism called SWIFT (Society for Worldwide Interbank Financial Telecommunication) wire transfer. This is an offline facility available with most banks in India, such as Axis, ICICI, Standard Chartered and ING Vysya, which are associated with those in other countries.

You need to fill the beneficiary's details, such as bank account number, postal address of the bank and its SWIFT code, in a form. Once this is done, the amount will be debited from your account and credited to the foreign bank account in 48-72 hours. If your bank does not provide this facility, you can get a demand draft made and give it to a bank which does.

If you want to buy something from a foreign website, an option that is better than the above two is PayPal, an online payment gateway. However, you can only transfer money from one PayPal account to another. Opening one is easy. You have to log on to the website, paypal.com, and provide your name, e-mail ID, password, postal address, contact number and the debit/credit card number.

To tighten the online payment mechanism and track the flow of money, the RBI announced recently that all Indians who have an account with PayPal will also have to provide their Permanent Account Numbers and details of the bank account.

To transfer the money, you will need to give the name and e-mail ID of the payee. When the money is swiped from your card and credited to his account, he will receive a notification either via e-mail or phone. While you cannot use PayPal to make personal payments—you cannot transfer money to a friend or relative abroad—they can send you money. You can withdraw the funds by either transferring them to your bank account or credit/debit card, or by requesting for a cheque.

The person who sends you money will have to pay a nominal transaction fee as well as a currency conversion charge, which is usually 3-4% of the amount. If, on the other hand, you are making a payment, you will not incur any fee or charge.

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Money transfer agencies

Another quick way to transfer money is through global payment service providers, such as MoneyGram and Western Union. These have tie-ups with a number of banks, which act as agents for them. Due to the RBI regulations, this facility is limited only to receiving funds, not to sending money abroad.

If, however, you're abroad and have to send money to India, you can approach an agent—which can be the bank or a service provider official—and give him your details as well as those of the recipient. Once you give him the money, he will provide you with a reference code.

You can inform the receiver, who will give this code to an agent in India, along with proof of identity. The agent will then hand over the money to the beneficiary. The sender will have to bear a fee which varies across countries.

Some of these service providers, such as Western Union, also allow you to send money through their websites as well as let receivers in India check the amount transferred. Kiran Shetty, regional vice-president (India), Western Union, says, "Last year, we signed an agreement with the State Bank of India to roll out an account-based money transfer service, which will start soon.

This will help consumers route the money transferred through Western Union directly into their SBI accounts."

If you are staying overseas, another option you can use to send money to India is through electronic transfer. Some banks, such as ICICI (money2india.com) and SBI (remit.onlinesbi.com), as well as online money transfer companies, such as TimesofMoney (remit2india.com), provide this facility. You will have to register on their websites and fill in your details, including your bank account number.

After this, you can fill in the amount of money you want to send along with the bank details of the receiver. The money will be transferred within five working days.

In case you have an account with a foreign branch of SBI and one in India too, you can transfer the money real time. As an exception, e-cheque transfers can be used by NRIs, who are in India for some time, to send money abroad.

However, before you transfer money, check the remittance limit allowed in that country and the purposes for which it is permitted.

For instance, the RBI doesn't allow money transfers for gambling or margin trading. You can check whether the purpose for which you are sending money is allowed under the Foreign Exchange Management Act by accessing fema.rbi.org.in.

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Remittances: Easy options for transferring money - The Economic Times

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Priya Kapoor, ET Bureau What do you do if you get a frantic call from your daughter who is studying abroad and is in dire need of money? You can’t simply courier wads of cash, can you? Under such circumstances, it’s better to be prepared. Fortunately, there are various options to transfer money from…

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Too many people in the payments industry today hold the misconception that the SWIFT network is only for cross-border payments. This was indeed the case in 1973, when 239 banks from 15 countries joined forces to create an efficient, automated, and secure payments network.

At launch, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) was built on three pillars, a secure and reliable communication protocol, a set of message standards and continuous new services aligning with its members’ needs.

A global network with a global reach

These pillars remain just as relevant 48 years later. So much more than a “cross-border payments network,” SWIFT has grown to serve more than 11,000 members in over 200 countries, providing a wide array of financial messaging services and influencing and innovating payments worldwide.

SWIFT has reimagined domestic high-value payments. Over 60 market infrastructures, covering 85 countries, rely on the SWIFT network to clear and settle domestic transactions. SWIFT FileAct, a bulk message exchange, allows correspondents to send and receive files mostly used to exchange bank statements or to exchange low-value, high-volume transactions.

SWIFT has extended the network to non-bank financial institutions, allowing the exchange of securities, foreign exchange and all other types of financial messages needed by its members. In fact, today more than 50% of messages on the SWIFT network involve securities trade transactions.

As the network expanded to cover most financial institutions worldwide, SWIFT opened its doors to large corporations such as Microsoft and GE. SWIFT became these companies’ single standardized connection to all their banks, adding efficiency and cost savings to treasuries worldwide.

Message standards and worldwide influence

From its inception, one of the key pillars of the SWIFT network is the message standard, a common language understood and processed by all its members.

The ISO 15022 standard, more commonly known as the SWIFT MT or Message Type standard, was introduced in 1995. It was similar in structure to that of the Telex technology that the network replaced. While it has evolved over the years, the MT standard remains the most used message format on the SWIFT network, and it has made its way to many domestic and private networks worldwide.

In the late 90s, SWIFT realized that the MT standard, although very useful, was restrictive in light of evolving technologies. SWIFT MT would not support the data that will be needed to be processed with each transaction. In 1999, SWIFT decided to adopt XML and develop a message standard that would recognize the richness of the data. ISO 20022 is often referred to as the “new standard.” But it was actually launched in 2004 in collaboration with SWIFT members. The new standard had some issues catching on, since adoption was voluntary and required heavy investment in backend systems,  But on the heels of a 2019 mandate, ISO 20022 is now being deployed in every major network worldwide, and it is the foundation for interoperability.

Security

Given its prominence in finance, SWIFT has become a prime target for hackers. In fact, multiple hacking collectives have targeted the SWIFT network in attempts to divert funds. In 2016, hackers robbed over $80M from a large bank, money that today remains unrecovered. Although the network itself was not breached, SWIFT quickly realized that each of its 11,000 members did not meet industry standard security levels.

To level the playing field, SWIFT launched the Customer Security Program, a set of 27 security controls forcing each member to completely reassess its infrastructure, thereby securing the overall network. Within the first year, 91% of SWIFT members (covering over 99% of volume) had confirmed their compliance with the controls. This shows the influence the SWIFT organization has developed over the years to ensure compliance in a typically slow-paced industry.

Innovation

SWIFT has not rested on its laurels. The network is continuously focused on innovation to improve the member’s experience.

The SWIFT global payment innovation (SWIFT gpi) launched in 2017 with an objective to deliver cross-border payments faster, cheaper and with full transparency and traceability. Following a successful mass adoption of SWIFT gpi, over 90% of wire transactions were credited within 24 hours, including 40% credited within 30 minutes. SWIFT gpi is now extending its capabilities to reduce the number of rejected transactions through pre-validation and to deliver value to corporations looking for transparency of fees and better traceability on inbound and outbound treasury payments. With the launch of SWIFT Go, the foundation piece for real-time cross-border payments, the gpi model is also applied to low-value payments.

In the past 5 years alone, SWIFT has launched several new services and completed multiple proofs-of-concept, ranging from launching the first real-time cross-border payment to assessing the use of blockchain technology as part of the SWIFT network while implementing Financial Crimes and data analytics services.

The future of SWIFT

If you still think SWIFT is “just for cross-border payments” you might need to take a second look. SWIFT is the heart and soul of payments worldwide, and without access to it, any economy could easily collapse.

As a result of recent global events, interest in SWIFT and its functions in financial services has certainly grown. Banks and large corporations have relied on SWIFT for secure messaging since 1973, but it doesn’t often get public visibility. By consistently delivering efficient and secure payments, SWIFT has earned the trust of 11,000+ members. As long as it continues to listen to their needs and collaborate and innovate to provide new value, SWIFT will continue to grow and dominate payments worldwide.

SWIFT is a trademark of S.W.I.F.T. SC.

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How is SWIFT still relevant after five decades? - IBM Business Operations Blog

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Too many people in the payments industry today hold the misconception that the SWIFT network is only for cross-border payments. This was indeed the case in 1973, when 239 banks from 15 countries joined forces to create an efficient, automated, and secure payments network. At launch, the Society for…

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https://focusmalaysia.my/bank-islam-eyes-15-rise-in-foreign-remittance-volume-via-swift-gpi-service/

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KUALA LUMPUR: Bank Islam Malaysia Bhd aims to achieve at least a 15% increment in foreign remittance volume within the next 12 months with the implementation of the SWIFT Global Payment Innovation (gpi) service.

The effort would also complement the bank’s target on fee-based income as it joined the 550 other banks in over 200 countries offering this new standard in global payments, according to chief executive officer Mohd Muazzam Mohamed.

“Customers are in a better position to pay for international goods and services in a fraction of the time, shorten their supply cycles and reduce their exposure to foreign exchange risks, as well as receive the real-time end-to-end view of their cross-border payments, costs and charges involved,” he said in a statement today.

Mohd Muazzam said the bank’s SWIFT gpi service is now available via its 144 branches nationwide.

SWIFT is a global member-owned cooperative and the world’s leading provider of secure financial messaging services.

It facilitates global and local financial flows as well as supporting trade and commerce.

SWIFT’s messaging platform, products and services connect more than 11,000 banking and securities organisations, market infrastructures and corporate customers in more than 200 countries and territories.

The service has been adopted by 3,550 financial institutions around the world, including all 60 top banking groups on SWIFT.

It is expected that all institutions on the SWIFT network will adopt gpi by the end of this year. – Jan 19, 2020 Bernama

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Bank Islam eyes 15% rise in foreign remittance via Swift gpi service

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KUALA LUMPUR: Bank Islam Malaysia Bhd aims to achieve at least a 15% increment in foreign remittance volume within the next 12 months with the implementation of the SWIFT Global Payment Innovation (gpi) service. The effort would also complement the bank's target on fee-based income as it joined the 550 other banks in over 200 countries [...]

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West moves to freeze Russia out of Swift: What you need to know about the global payments system

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West moves to freeze Russia out of Swift: What you need to know about the global payments system

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West moves to freeze Russia out of Swift: What you need to know about the global payments system

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Excluding Russian banks from Swift restricts the country's access to international financial markets. . Read more at straitstimes.com.

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Bank Islam implements SWIFT GPI service

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Russia's invasion of Ukraine has spurred a rush of remittances from citizens from both countries living abroad to help their families withstand war disruptions.

Transfers to Ukraine through MoneyGram, the US-based remittances company, spiked by 120% on Feb. 24th, the day Russia attacked Ukraine, while remittances to Russia rose by more than 50% the week of the invasion, said CEO Alex Holmes.

The jump is not unlike what the company has seen after natural disasters, like a tsunami or a hurricane. Russia's military attacks have crippled big sectors of the Ukrainian economy and destroyed large parts of the country's infrastructure. Russians, meanwhile, are feeling the effects of unprecedented financial sanctions that have collapsed the ruble.

The conflict is reverberating beyond the two countries. Russia is home to many migrant workers from central Asian countries that depend on remittances.

How do remittances affect the global economy?

Last year, Ukraine received more than $16 billion in remittances, while Russia got $10 billion. Most of the money comes from the EU or the US. Prior to the war, remittances made up 9% of Ukraine's gross domestic product (GDP) and 0.6% of Russia's GDP.

Ukraine's remittance inflows are dominated by its neighbor Poland. As Ukrainians disperse, the flow of funds will likely get redirected to Poland, Hungary, Romania, Moldova, and other parts of Europe.

Several central Asian countries will be hit as well as the conflict makes it harder for migrant workers in Russia to send money back home. These countries depend even more on remittances, which make up nearly 30% of some of their GDPs. Not getting them could trigger economic and political turmoil.

Sending money out of Ukraine, meanwhile, is already harder. In an effort to avoid a collapse of its banking system, the central bank has restricted remittance flows abroad, and limited withdrawals to the equivalent of $1,000 a day.

How do sanctions affect remittances?

The sanctions, including expelling Russia out of the SWIFT banking communications system, are expected to disrupt remittances flowing out of that country. Several money-transfer companies, including Wise and Remitly, already ended services to Russia due to the sanctions.

MoneyGram is still able to send money to both those countries because the banks sanctioned by the US and EU-like Sberbank and VTB-aren't directly involved in MoneyGram's funds flow to the country. Though the comppany initially had trouble sending money from Russia to Kazakhstan and Georgia, which relied on VTB and Sberbank as correspondent banks to move funds, MoneyGram said it has since found alternatives.
Correction: An earlier version of this article stated that Wise and Remitly had ended services to Ukraine. Both companies only ended services to Russia.

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Remittances to Ukraine and Russia have shot up by more than 50% since the invasion

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Russia's invasion of Ukraine has spurred a rush of remittances from citizens from both countries living abroad to help their families withstand war disruptions. Transfers to Ukraine through MoneyGram, the US-based remittances company, spiked by 120% on Feb. 24th, the day Russia attacked Ukraine, while remittances to Russia rose by more than 50% the week of the invasion, said CEO Alex Holmes.

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US banks prepare for cyberattacks after latest Russia sanctions

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RIYADH: If the number of events held at the Riyadh Season entertainment festival is any measure of success, then Saudi Arabia’s live music industry is set to become the biggest driver of the domestic entertainment business.

Organized by the General Entertainment Authority, Riyadh Season 2021 was held between Oct. 2021 and March 2022. It witnessed 7,500 diversified entertainment events, including concerts, exhibitions and theatrical shows, both Arab and international.

I’ve never in 30 years worked on a project with such scope. MDLBeast has a vision of excellence at a world- class level, backed up with the effort and determination required to achieve that.

Alex reardon, Creative director at Silent House

The festival featured Egyptian singers Mohamed Ramadan and Tamer Hosny, Bollywood actor Salman Khan and US rapper Pitbull, who attracted an audience of 750,000.

Other KSA-based music events include Riyadh’s annual SoundStorm, now literally the world’s largest Electronic Dance Music festival, in December 2021, and a succession of concerts alongside Jeddah’s recent Formula One races featuring American supergroup the Black Eyed Peas and R&B star Chris Brown, among others. In addition, Mariah Carey, Enrique Iglesias and One Republic have all performed in Saudi Arabia.

As a focal point of the Vision 2030 reform program, the Kingdom’s entertainment sector is seeing over $64 billion in investment, with the live music industry a key beneficiary.

As a focal point of the Vision 2030 reform program, the Kingdom’s entertainment sector is seeing over $64 billion in investment, with the live music industry a key beneficiary. (Getty Images)

According to Saudi Arabia’s Music Commission, a department of the Saudi Ministry of Culture, the Kingdom will create about 65,000 music-related jobs within the next eight years. Moreover, it is working toward enabling the music sector to contribute 1 percent to the Kingdom’s economy by 2030.

Calm after the storm

A prime mover of this burgeoning industry is Jeddah-based MDLBeast, the producer of SoundStorm and Formula One concerts. The company describes itself as “a global music and new media platform with music culture at its core and a home for creators and music lovers.”

One such creator is Michael ‘Curly’ Jobson, a legendary figure in the global live music business. In his youth a guitarist with UK indie band Echo & the Bunnymen, Jobson has been a music tour manager for decades and, in February 2020, was appointed MDLBeast’s Executive Director of Events.

HIGHLIGHTS

• Riyadh Season 2021 was held between October 2021 and March 2022. It witnessed 7,500 diversified entertainment events, including concerts, exhibitions and theatrical shows, both Arab and international.

• The festival featured Egyptian singers Mohamed Ramadan and Tamer Hosny, Bollywood actor Salman Khan and US rapper Pitbull, who attracted an audience of 750,000.

• According to Saudi Arabia’s Music Commission, a department of the Ministry of Culture, the Kingdom will create about 65,000 music-related jobs within the next eight years. Moreover, it is working toward enabling the music sector to contribute 1 percent to the economy by 2030.

“We put on events of any kind — musical, corporate, sports — from the concept to the pitch through to the design, operations and bringing it to fruition,” Jobson told Arab News.

This approach relies upon a host of contractors to provide solutions from plumbing and drainage to laying of asphalt and electrical installations.

Egyptian singer Mohamed Ramadan. (Youtube Screenshot)

SoundStorm, for example, involved Saudi construction firm Al Arrab, Lebanese events services provider Fiesta and Riyadh-based architecture firm Key Design, among many other local and regional firms.

And from Los Angeles came Silent House, a production design firm that conceives and builds staging for global headliners such as Harry Styles, Rihanna and Bruno Mars and which handled the overall design of SoundStorm 2021.

“I’ve never in 30 years worked on a project with such scope,” Silent House creative director Alex Reardon told Arab News. “MDL Beast has a vision of excellence at a world-class level, backed up with the effort and determination required to achieve that.”

Jobson sees the Kingdom’s music events sector in historical terms with reference to its future and its past.

“2030 is the date presented for a particular level of growth in Saudi Arabia, but I’m seeing something a little bit different, which is tourism becoming the lifeblood of the Kingdom, and with tourism comes the demand for entertainment,” he said.

“The Red Sea coastline goes from the Egyptian border to the Yemen, which is akin to the Florida Keys to Canada. And think what happened in the last 300 years up that coastline!

“I’m not sure it’s any different here with the rising population and the increasing numbers of youth with an equally huge appetite for entertainment.

“We need to focus on making Saudi Arabia a regular touring destination – rather than a one-off stop – so that performers go from Athens to Alexandria to Jeddah to Riyadh and then onwards to Asia, Australia and California.”

Raising the bar

Saudi Arabia’s Assistant Minister for Tourism, Princess Haifa bint Mohammed Al-Saud, also sees music and tourism as two mutually supportive revenue streams for the Kingdom in its transition from dependence upon oil to a more diverse and creative economy.

“You are talking about 25 percent of the UK and US population traveling to attend at least one music festival a year,” Princess Haifa said at the XP Music Conference, held in Riyadh in December 2021.

“This tells you where the world is shifting. From hosting 101 concerts in Saudi Arabia in 2019, we are looking at increasing that number by 500 or 600 percent from 2022,” she added.

Clearly, this exponential growth cannot happen without nurturing local talent and expertise. Jobson believes that knowledge transfer and a permanent ecosystem of niche companies — as opposed to the temporary hiring of foreign contractors and equipment — is the only way forward for the Kingdom.

“The western music industry started as a modern business model in the 1950s with recording, publishing and venue management. With that came PA systems, lighting designers, set designers and sound engineers,” said Jobson.

“All of this is a brand-new thing in Saudi Arabia. It’s only a couple of years since the very forward-thinking crown prince has opened it up to us.”

Reardon is optimistic regarding the advent of a fully-fledged music events industry in Saudi Arabia.

“I think the base level commitment to excellence will not change,” he said. “There’s been a huge learning curve for those of us coming from our side of the planet and those in the Kingdom.

“We’re learning from each other and about each other in a very collaborative way, which means that the seedbed for growth is very fertile.

“We can bring our decades of experience and work very well with people in the Kingdom to create successes in live entertainment that would be almost impossible in Western Europe and North America.”

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US banks prepare for cyberattacks after latest Russia sanctions

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WASHINGTON: US banks are preparing for retaliatory cyberattacks after Western nations slapped a raft of stringent sanctions on Russia for invading Ukraine, cyber experts and executives said. Tensions between Russia and the West escalated on Saturday as the US and its allies moved to block some Russi…