A trade finance facility to be discussed by the World Bank and its affiliates at the G20 summit of leading nations on April 2 will offer $10-11 billion in funds, a senior trade source said on Wednesday.
Because funds in the 'global trade finance liquidity pool', mainly for short-term use, can be rolled over, the facility could generate an additional $50 billion a year, the source said after a meeting of experts hosted by the World Trade Organization (WTO).
The trade finance market is reportedly $100 billion short under the financial crisis. The WTO is concerned about shrinking international trade under the financial crisis and has been backing the trade finance support initiative.
Corporations and lenders have clamored for increasing trade insurance covering importers' payments. Trade finance representatives from the G20 nations will meet in Washington next Wednesday to discuss ways to bolster the framework.
Another proposal envisions a multilateral reinsurance plan designed to defray the risks taken on by a given country's trade insurer. Nine Asian economies, including Japan and South Korea, have agreed to such a tack.
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