Distributed ledger technology (DLT) such as blockchain could produce $1 trillion in new trade over the next decade, according to a joint report from the World Economic Forum (WEF).
The report, which is called ‘Trade Tech – A New Age for Trade and Supply Chain Finance,” published in association with Bain & Company, assesses DLT prospects within the global trade finance realm.
Long an area of growing focus for innovation, trade finance continues to lean on legacy technology, with a number of blockchain-based initiatives now keen on growing efficiency.
“Distributed ledger and other technological innovations promise groundbreaking advances in trade and supply chain finance by reducing costs and ease of use,” the report’s foreword claimed.
Among their conclusions, the WEF and Bain projected that DLT would bring in new trade, helping bridge the existing trade finance gap of $1.5 trillion.
“[Approximately] 30% or $1.1 trillion of new trade volume will result due to DLT removing barriers,” they say, adding that “[approximately] 40% or $0.9 trillion of traditional will move to DLT for better service levels and lower fees.”
The WEF report meanwhile includes identical signals for governments, the organization claiming that even for those within structures such as the European Union, accepting DLT is de facto inevitable.
“They should include distributed ledger technology as part of any relevant, forward-looking regulatory considerations, such as cross-border food imports,” it concludes:
“With some governments already starting to make these moves, the laggards will become increasingly disadvantaged.”