The coronavirus pandemic has changed the way the financial world works with focus shifts into other branches. From considering commodities trade as the be-all and end-all of banking, institutions were now planning to set up digital trade registries in forward-thinking economies like Singapore.
Since the pandemic started, banks have lost billions of dollars because of defaulters and a general lack of transactions. The setting up of a digital trade finance registry is expected to reduce trade fraud and provide some much-needed transparency to the system.
Singapore has always been considered as a market that is accepting of new trends and the latest trend is just another example of that. Native Singapore banks such as Hin Leong Trading Ltd were also massively affected after reports revealed that the bank was down in the trenches after the pandemic surged. On Tuesday, the DBS Group and Standard Chartered revealed that they were leading a group of 12 other banks in Singapore to establish a central trade transaction database.
Economic experts stated that taking the digital trade registry route was a smart way of cutting losses and taking precautionary steps for the future. Ho Hern Shin, an assistant managing director at the Monetary Authority of Singapore also said:
“A digital trade registry strengthens trade financing banks’ ability to avoid duplicate financing and facilitates more sustained credit flow in trade financing. This mitigates against duplicate financing from different bank lenders for the same trade inventory, leading to greater trust and confidence among banks and traders alike.”
Sources close to the developments informed users that the registry has been built on a blockchain network supported by dltledgers, a popular technology provider. Both Standard Chartered and DBS worked on the entire proof of concept in association with banks such as ABN AMRO, Deutsche Bank, OCBC, and Rabobank. Some analysts added that the registry, once complete, should be assessed by government authorities so that it complies with all statutory laws.