Blockchain & Money: Session 22: Trade Finance & Supply Chain, by M.I.T. Sloan School of Management with Professor Gary Gensler
Session 22: Trade Finance & Supply Chain
- Overview: Readings and Study Questions; Trade Finance; Trade Finance Blockchain Technology Efforts; Shipping and Supply Chain Blockchain Projects; Final Projects; Spring Courses; Conclusions.
- Session 22: Study Questions
- What attributes of trade finance and supply chain management might make this a ripe set of use cases for blockchain applications?
- What lessons might be drawn from the ongoing projects?
- Session 22: Readings
- ‘Trade Tech–A New Age for Trade and Supply Chain Finance’, World Economic Forum/Bain.
- ‘How Banks Are Teaming Up To Bring Blockchain To Trade Finance’, CB Insights.
- ‘Hong Kong, Singapore to link up trade finance blockchain platforms’, Reuters.
- ‘Business Interest in Blockchain Picks Up While Cryptocurrency Causes Conniptions’, Wall Street Journal.
- ‘De Beers turns to blockchain to guarantee diamond purity’, Reuters.
- Financing International Trade
- Bank Supported–‘Trade Finance‘
- Letter of Credit
- Documentary Collection
- Factoring and Forfaiting (more here)
- Import and Export Loans
- Pre-Export Finance
- Supplier Credit
- Supply Chain Finance
- Commercial Arrangements–‘Trade Credit’
- Open Account
- Cash in Advance
- Consignment
- Export Credit Insurance and Public Guarantees
- Bank Supported–‘Trade Finance‘
- Trade Finance–Additional Projects
- China–Peoples Bank of China backed trade finance blockchain platform
- Dubai–TradeAssets marketplace for buying and selling trade finance assets
- Hong Kong & Singapore–Global Trade Connectivity Network for Documents
- India— a). Finacle Trade Connect for validation, documents and payment
- b). Trade Receivables e-Discounting linked to RBI Trade Receivable e-Discounting System
- Singapore–National Trade Platform with NTT Data and MUFG Bank proof of concept
- Komgo SA–Ethereum based–ConsenSys plus 15 Banks and trading firms
- Shipping and Supply Chain Blockchain Projects
- Shipping
- Accenture–With APL, Kuehne & Nagel, and AB InBev
- TradeLens–IBM and Maersk
- Supply Chain
- Carrefour–Chickens, Dairy and other food products
- DeBeers–Diamonds
- TrustChain–IBM–Jewelry supply chain
- Walmart–IBM–Food from farm to grocery shelf
- World Bank–Indonesian Palm Oil proof of concept
- Shipping
- Final Projects: Assessing Use Cases
- What is the value creation proposition and ‘pain point’ being solved?
- Which transactions and data need recording?
- Which multiple stakeholders need ‘write’ and ‘read’ access to ledgers?
- Which costs of verification or networking can be reduced?
- What are competitors doing to address similar value propositions or markets?
- Why are append-only log and multiple party consensus the best solution?
- If permissionless applications, why is native token the best solution?
- If so, why permissionless?
- Tradeoffs of scalability, performance, privacy, security, & coordination
- Can traditional data base adequately address use case?
- How can broad adoption be realized?
- What is the customer experience vs. current experience and interface?
- Spring 2019 Policy Course
- Public Policy & Private Sector (15.S66) Tuesday 5-8pm
- Explores the intersection of public policy and the private sector
- Senior level public policy guests in discussion-based course
- Key economic policy–technology, trade, tax, financial, and competitions policies
- Tentative Guests Speakers–Sheila Bair, Sara Bianchi, Steve Moore, John Podesta, Sharis Pozen, & Miriam Shaprio
- Taught with Simon Johnson
- Public Policy & Private Sector (15.S66) Tuesday 5-8pm
- Spring 2019 Blockchain Technology Courses
- Blockchain Lab (15.S68) Tuesday 1-2:30pm
- Action Learning working on Digital Currency Initiative projects
- With Simon Johnson, Neha Nerula, Michael Casey
- Emerging Blockchain Havens (15.228 B) H3 Monday 6-9pm
- Student Led trip to Estonia and Switerland during Spring break & SIP weeks
- Crypto Finance (15.S04) H4 Tentatively Mon/Wed 10-11:30am
- With Antoinette Schoar and Leonid Kogan
- Blockchain Lab (15.S68) Tuesday 1-2:30pm
- Conclusions:
- Trade Finance plays Significant Role in $17 Trillion Export Markets for Goods
- Trade Finance is multi-party and document intensive
- Verification, Networking and Trust key to Trade Finance Economics
- Multiple Consortia and Projects Underway
- Banks, Governments and Shippers mostly Exploring Permissioned Systems
- Blockchain Technology is Likely to be Catalyst for Change in Trade Finance
Biblio:
- Gary Gensler. 15.S12 Blockchain and Money. Fall 2018. Massachusetts Institute of Technology: MIT OpenCourseWare, https://ocw.mit.edu. License: Creative Commons BY-NC-SA.
- Video Link: Session 22: Trade Finance & Supply Chain.
- Slides Link: Session 22: Trade Finance & Supply Chain, Slides.