• Published on 23 May 2024
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BAFT and ADB explore deep-tier supply chain finance's impact

BAFT, the leading global financial services association for international transaction banking, and the Asian Development Bank (ADB) today released a white paper titled "Deep-Tier Supply Chain Finance (DTSCF): Unlocking Potential," highlighting DTSCF's role in bridging trade finance gaps and enhancing global supply chain visibility.

DTSCF is an innovative financial solution with the potential to unlock financing for deeper tier suppliers, where small and medium-sized enterprises (SMEs) are prevalent, by allowing access to finance by leveraging the credit risk of the anchor buyer. DTSCF not only unlocks finance at favourable rates for deeper tiers in a supply chain, but it also promotes an ecosystem of financial stability, risk management, and sustainability throughout the entire supply chain.

BAFT and ADB developed this white paper to provide a shared view of DTSCF, to outline its features as a new technique in financing trade and supply chains, to define what DTSCF is and what it is not, and to offer necessary definitions and legal frameworks to make it a success at scale.

Tod Burwell, president and CEO of BAFT, said: “We’re pleased to have been able to build on the initial work done by ADB on this subject to help identify the key considerations to successful deployment of deep-tier supply chain finance, which can be a useful tool to help address the persistent trade finance gap.”

Steven Beck, ADB’s head of trade and supply chain finance programme, said: “Deep-tier supply chain finance is an exciting innovation that has the potential to drive greater resilience in supply chains and unlock the potential for SME-led economic growth, job creation, and prosperity. The publication details the next steps required to overcome the challenges in scaling this innovation and we’re excited to tackle these with our public and private sector partners.”

 Re-disseminated by The Asian Banker