Blockchain in trade finance: The Good, the Bad and the Verdict

Tarik Kellaf ()

Modern Finance, 2024, vol. 2, issue 2, 136-160

Abstract: This study explores the potential of blockchain technology to optimize trade finance processes and to address inefficiencies and fraud risks in centralized systems that contribute to a growing global trade finance gap, particularly affecting SMEs. Through documentary analysis and the case of Morocco's OCP Group, with insights for practitioners, we explore the benefits and challenges of integrating blockchain into trade finance. Our findings suggest a hybrid solution integrating blockchain into existing infrastructure, relying on both off-chain and on-chain governance mechanisms in smart contracts. This approach aims to bridge the gap between traditional and blockchain solutions in trade finance and discusses the potential for a more pragmatic way forward for the industry.

Keywords: blockchain; trade finance; smart contracts; letter of credit; factoring; supply chain; trust; transparency; cost; scalability; security; regulation (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:bdy:modfin:v:2:y:2024:i:2:p:136-160:id:206

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