Matthieu Crozet, Banu Demir, Beata Javorcik, 20 December 2021

Global trade fell sharply during the first few months of the Covid-19 pandemic. This column analyses the use of letters of credit to insure trade flows during the crisis. Using product-specific data on reliance on trade insurance, it demonstrates that trade flows insured by letters of credit were more resilient than other flows. In general, the impact of letters of credit are stronger for exports to countries with a high number of Covid-19 cases. The significant effects of trade insurance thus suggest that uncertainty played an important role in driving the trade collapse in 2020.

Marc Auboin, Martina Engemann, 03 December 2012

What effect does trade finance have on international trade? This column uses new data to stress the importance of trade finance for international trade both in crisis and in non-crisis periods. The major policy lesson is that there must be high levels of market incentives for supplying trade credit, particularly during a period of ‘deleveraging’ of the financial system. That said, trade credit statistics could be vastly improved if we wish to continue comparing global trade finance transactions against global trade.

Jean-Pierre Chauffour, Christian Saborowski, 23 January 2010

What saved trade from collapsing totally during the global crisis? This column argues that export credit agencies played a key role in stabilising the trade finance market, and thus helped reduce credit risks and allowed exporters to offer open account terms in competitive markets.

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