How One Currency Rule Reshaped Global Trade Finance

In this episode of Global Trade with Fexingo, Lucas and Luna explore the little-known rule that transformed how cross-border payments are settled: the Bank for International Settlements' 1988 Capital Accord, known as Basel I. Specifically, they focus on the rule that assigned a 100% risk weight to short-term trade finance instruments like letters of credit. This seemingly technical change made it more expensive for banks to support trade, especially in emerging markets. The hosts trace the impact through a concrete example: how a Kenyan coffee exporter suddenly faced higher financing costs, which rippled through supply chains. They also discuss how later Basel reforms—Basel II and Basel III—adjusted these weights, but not without lasting effects on trade credit availability. The episode ties the regulatory shift to the broader trend of trade finance gaps in developing countries, using data from the Asian Development Bank. A focused look at how a rule written for bank stability inadvertently raised barriers to global commerce. #BaselI #TradeFinance #LettersOfCredit #BIS #CapitalAccord #EmergingMarkets #KenyaCoffee #SupplyChain #Regulation #GlobalTrade #Economics #Business #Finance #Podcast #FexingoBusiness #BusinessPodcast #TradeCredit #ADB Keep every episode free: buymeacoffee.com/fexingo