The BIS Innovation Hub released the results of Project Dynamo, which explored using Digital Trade Tokens (DTT) to address the trade finance gap for micro, small and medium-sized firms (MSMEs). The DTTs were stablecoins backed by bank funds and issued on the Ethereum public blockchain.
It’s well known that there’s a substantial trade finance gap for SMEs pegged at $1.7 trillion by the Asian Development Bank. The International Finance Corporation (IFC) extended the group to include micro firms and estimates the gap is $5.2 trillion.
A key reason for the gap is small businesses are perceived as high risk by banks and funding providers.
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