Blockchain In International Trade Execution

Digitalization of global trade is a journey that to some extent has an inevitable destination. Like the introduction of the first machines into the textile industry in 19th century Britain, the shock of change, perhaps even the impact on labour may cause voices of dissent to be heard alongside the cheerleading for modernisation and scalable efficiencies.

One thing is certain, however, and that is the general direction of travel which will almost certainly "commoditise" further the commodities and other international trade sectors by introducing transparency, standardisation of contractual terms and demystification of the art of negotiating and executing at least some aspects of the international sale, movement and payment of goods and services.

The driver for change will be both the efficiency brought by reducing reliance on labour intensive data processing, contract confirmation and other administration and the elimination of costly and wasteful human error in both contracting and payment settlement - possibly further elements of the contract chain too. Unlike the Luddites who protested the industrial revolution's steady march by vandalising the newly delivered machines, no computer bashing is anticipated to mark the introduction of blockchain and other technological advances into the world of international trade.

Unlike the 19th century weavers and other affected workers, traders are unlikely to see their jobs dematerialise alongside the paper documents that are seen as part of the problem dragging an anchor behind 21st century trade. There is much more to successful trading in the commodities markets than the churn of contractual documentation and the mundane aspects of contract execution and payment - all areas fraught with operational risk. Human beings will for some time to come be seen at the centre of trading relationships but supported by machines. Some jobs will doubtless be "right-sized" in this process as will be seen across different industries.

The international trade business has bene looking at how to introduce technology both to speed up and to improve accuracy in certain aspects of trade execution and settlement for around 25 years. The first incarnation of the Bolero project in 1995, the introduction in 2002 of the first version of the eUCP regulating electronic performance of documentary credit obligations and subsequent ventures into paperless trade including GlobalTrade and ESSDocs are part of a string of well backed...