Trade credit can expose firms to FX risk – BIS paper

Currency borrowers partially insulate their partners from shocks, but still pass them along supply chains

Global trade

Firms that rely on trade credit may be exposed to foreign exchange risk even if they do not conduct cross-border transactions, a working paper by the Bank for International Settlements finds.

In a trade credit relationship, one firm grants credit to another by delaying the deadline for a payment for goods or services. The paper’s authors – Bryan Hardy, Felipe Saffie and Ina Simonovska – say that one party to such a transaction might be a borrower in FX markets, which means trade credit could

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@centralbanking.com or view our subscription options here: http://subscriptions.centralbanking.com/subscribe

You are currently unable to copy this content. Please contact info@centralbanking.com to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to Central Banking? View our subscription options

Register for Central Banking

All fields are mandatory unless otherwise highlighted

This address will be used to create your account

Most read articles loading...

You need to sign in to use this feature. If you don’t have a Central Banking account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account

.