In a letter published in the Financial Times today, ICC Secretary General John W.H. Denton AO calls on G20 leaders to heed warnings over the real-world consequences of banks retreating from financing commodity traders.
Already threatening the livelihoods of small businesses who rely on funding and work on narrow margins, the worrying trend says Mr Denton, “could be a precursor to a much broader shortfall in the supply of trade credit once demand returns to the global economy.”
Earlier this year, ICC warned that trade financing gaps risk hampering a global recovery – impacting the survival chances of small businesses. On behalf on over 45 million companies wordwide ICC has called for proactive government interventions to ensure the market can power an economic rebound in the wake of the COVID-19 crisis.
ICC estimates that as much as US$ 5 trillion in market capacity will be needed to return trade volumes close to 2019 levels in 2021. In May, ICC called on policymakers to proactively scale support for trade finance transactions to prime the market ahead of demand returning to the global economy identifying four priority interventions that, if properly calibrated, could immediately bolster financing capacity.
In his letter to the Financial Times Small business needs the G20 to safeguard trade financing, published today, Mr Denton concludes:
“The events of recent weeks… show the time for a wait and see approach is over. For the sake of the millions of small businesses banking on global trade to drive a post-pandemic recovery, it’s high time for governments to take all necessary steps to safeguard the supply of trade finance.”