We can say that an asset has a velocity of 0 if, over the course of a year, no one buys or sells it. The lack of liquidity would cause the asset to trade at a discount to its “intrinsic” value. Assets need some velocity to achieve their full intrinsic value. The difference is known as the liquidity premium.

Trade finance has seen more successful blockchain pilots than other use cases, but will historically conservative banks have the same risk appetite to move from testing to full-scale production? Where is this data coming from? Start your free trial today EmailWhere is this data coming from? Start your free trial today Email As trade wars intensify, banks are looking to blockchain as a way to streamline international trade transactions. Historically inundated with paper trails and inefficiencies, banks and regulators worldwide are teaming up to digitize the trade financing process. HSBC, Standard Chartered, and others belong to a range of consortia that have had successful pilots using distributed ledger technologies (DLT) to process live trade finance transactions.

The future of liquidity management When asked about the future of liquidity management, our experts agree that we’ll see a great deal of change in the next few years. While traditional trade finance tools like Letters of Credit are still heavily used by most customers, they expect to see new competition emerging in the form of fintechs. “New technology—whether it’s blockchain or something else—will definitely have an impact on the market,” Karhapää says. “But exactly what that impact will be remains to be seen. We can at least expect new tools and new ways of administering liquidity management.” Rather than being disrupted by new technology, Nordea is positioning itself at the forefront of change. Later this year its WeTrade platform will be released, an initiative co-founded by a consortium of nine banks. WeTrade will be the first ever blockchain-based trade finance platform. Based on distributed ledger technology, WeTrade’s goal is to make domestic and international trade easier, safer and more efficient for companies of all sizes. Its launch will be a significant milestone in the evolution of trade finance, and will provide a whole new toolkit for treasuries seeking to improve their liquidity management.

emerging in the form of fintechs

implementing shared KPI

global risk mitigation

In the past, treasuries may have looked at bespoke IT solutions that were designed to support the way they operated. But now, they’re realising the benefits of streamlining and simplifying the technology they use. “Before it was fashionable to have tailor-made solutions for your treasury, but now we’re seeing more interest in basic setups and file formats—companies want to use common technical standards,” says Paukku.

real-time technology, where payments can happen in a matter of seconds, there are greater risks of cyber fraud to contend with.

“Higher OMOs can distort the rates curve,” said a banker. The move would boost RBI’s foreign exchange reserves which were at $401.7 billion for the week ended March 1.