Chapter

Chapter 3. Banks, Trade Finance, and Financial Distress

Author(s):
Jian-Ye Wang, and Márcio Ronci
Published Date:
February 2006
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Author(s)
Herman Mulder and Khalid Sheikh19

For emerging markets, international financing and capital flows are a double-edged sword: they carry tremendous potential for increased economic welfare, but at same time harbour many dangers. Crises over the past two decades have brought about sovereign defaults, moratoria and transfer/convertibility problems in many emerging-market countries, which have led to IMF-supported programs followed by reschedulings of the external sovereign debt of sovereign creditors (mainly Paris Club creditors). Also, the crises have affected the private sector, bringing about bankruptcies and severe social distress.

The crises of the past two decades, although different in intensity and effects, have been caused by various economic factors. However, one economic factor is common to all these crises: many emerging economies do not generate sufficient hard currency income to finance their investments and import needs, and have recorded a negative trade balance over a long period of time. The international financial community will not be able to prevent future crises as long as many emerging economies continue to record large trade deficits. Therefore, it is of key importance to develop policies to stimulate the generation of hard currency income by emerging economies.

While financial crises are not a new occurrence, there clearly has been a shift from an economic fundamentals-based crisis toward more expectations-based crises.20 This is partly due to the globalization and liberalization process, which accelerated in the 1990s. The growing participation of the private sector has led to more complex structuring of finance deals as well as the use of a number of new debt instruments. In addition, emerging economies have become more involved in the international financial intermediation and integrated into world trade. Both developments have led to greater vulnerability of emerging economies and highlighted the risks they face. On balance, the increased reliance of emerging economies on international financing appears to have been beneficial, but there is little question that this financing has fallen short of its potential and, in some cases, has made borrowing countries worse off.

Evidence suggests that the cost of financial crises has increased (Table 3.1). The total losses are estimated at $249 billion from the 1980s crises and $419 billion from the 1990s crises. Although the average total loss has increased only marginally from 0.6 percent of GDP a year in the 1980s to 0.7 percent in the 1990s, the costs were high and concentrated in some countries, as exemplified by the financial trauma in Asia, where the losses are estimated at 1.4 percent of GDP per year.

Table 3.1.GDP Losses from Banking and Currency Crises, 1980s and 1990s
1980s1990s
(GDP loss from financial crises in emerging markets

in billions of U.S. dollars)
Total249419
Asia13260
Latin America207123
Africa1518
Europe11
Middle East147
(Average annual GDP loss in emerging markets

in percent)
Average0.60.7
Asia0.11.4
Latin America2.20.7
Africa0.50.6
Europe0.1
Middle East0.30.1
Source: W. Dobson and G. Clyde Hufbauer, 2001, World Capital Markets: Challenges to the G-10 (Washington: Institute for International Economics).
Source: W. Dobson and G. Clyde Hufbauer, 2001, World Capital Markets: Challenges to the G-10 (Washington: Institute for International Economics).

This chapter will examine the potential benefits from concerted action to continue financing trade facilities in times of financial crisis and the lessons learned from the different types of crises in recent years. The chapter is motivated by three facts. First, trade finance is the lifeline for emerging economies (Table 3.2), as more than 90 percent of world trade is conducted on the basis of short term credit.21 Second, the potential for future growth in trade is substantial, as intraregional trade could be enhanced and the share of emerging economies in the world trade increased. Third, the international community has to develop generally-accepted rules to maintain trade-related finance during crisis, since trade finance is highly dependent on confidence in and information on the actions expected from other market participants.

Table 3.2.Global Integration: Change in the Ratio to GDP from 1981-85 to 1997-2001(In percent)
 TradeExternal Finance
Industrial countries3.977.3
Emerging economies15.419.9
Source: IMF, World Economic Outlook.
Source: IMF, World Economic Outlook.

Addressing these three key areas could help break the recurring cycle of emerging countries’ crises and the reactive crisis management shown by the international financial community. In today’s globalized world, public and private sector parties in both emerging and developed economies have a clear interest in preventing future crises. They should join forces and build a new public-private partnership to assist emerging markets in their export efforts.

In this connection, the financial evaluation of the tools available to manage the country risks of emerging countries and a readjustment of international financial institutions (IFIs) will play a central role. With a few exceptions, most emerging countries are still rated as “noninvestment grade.” While IFIs’ support provides some assurance in limiting the disruptive impact of a financial crisis, new lines of defenses are needed.

This chapter gives a brief historical review and touches upon the complexities of the international finance. It then looks into trade-finance-related issues such as forms, trade finance structures, and treatment of preferred creditor status. The chapter also focuses on other modalities to resolve or prevent crisis and addresses a number of other challenges.

Growing Complexity of International Finance

Historical Review

Prior to 1990, infrastructure, services, and trade promotion were generally believed to be public goods for which governments were ultimately responsible. However, in a large number of emerging economies, insufficient investment, growing pressures on government budgets and a general concern about inefficient public service provision resulted in greater participation of the private sector in sectors usually dominated by the public sector.

Over the last decade, the private sector has become a key player in providing financing for infrastructure and trade. Lower global trade and investment barriers, reduced communications and transport costs, privatization, 22 and financial deregulation have contributed to a strong performances by emerging economies. This economic performance has been led by rapid export expansion and supported by substantial capital inflows.23

A world where capital flows are overwhelmingly private-to-private has been characterized by the following salient features:

  • Closer linkages between domestic and international markets, which has increased interdependency and contagion risk.
  • The use of more complex financing structures and a range of new financial instruments, which has increased the range of choices enormously, but introduced new types of risk. The complexity is also illustrated by the growing involvement of the export credit agencies24 and IFIs in covering various types of risk.
  • A growing vulnerability of balance-of payment due to the volatility of short-term capital flows.
  • A change in profile and composition of external debt, which is no longer heavily concentrated among relatively homogenous international banks consisting of debt obligations to a much more diverse group of investors.
  • Following many recent crises, a substantial rise in the perceived risk of infrastructure projects and trade finance, which has threatened project viability and the credibility of long-term governmental commitments. Investors have shown a clear preference for assets with reduced credit risk and enhanced liquidity.25
  • No single solution for restructuring debts. Debt restructurings on a case-by-case basis seems more appropriate, hence the role and mechanics of the restructuring bodies (Paris Club/London Club) should be reappraised.

The implications of these changes have been significant, as crises have unfolded more rapidly and deeply and become more complex. There have been eight financial crises within six years and nearly a quarter of a trillion dollars in debt and risk has been shifted from the balance sheets of private sector investors to official ledgers.26

Growing Complexity

Given macroeconomic imbalances and fragile financial systems in many emerging countries, a recurrence of financial crises should be expected. Further drying up of capital flows and retrenchment in bank finance to the emerging countries are serious concerns, particularly in the process of implementing the new Basle proposals. Accordingly, emerging-country authorities need to make substantial reform efforts to create an investor-friendly environment—especially critical in times of crisis—and to allow the countries to benefit from new and more efficient investments. It is also important to define new roles for all stakeholders and make further progress on crisis prevention. For example, internationally operating banks under new Basle guidelines may have to step up their capital requirements significantly for high risk borrowers.27

Risk and profitability concerns rather than clients’ needs will continue to drive banks’ decision on cross-border credit and hence affect trade finance. Greater efforts from the IFIs and the private sector are also needed to provide the support necessary to stabilize a default situation.

Key Issues Related to the Provision of Trade Finance to Countries in Crisis

In today’s economically integrated world, trade matters more than ever. Countries that have intensified their links with the global economy through trade and investment have usually grown more rapidly over a sustained period and consequently have experienced more economic opportunities and reduced poverty. Fair and free trade can also foster security and political stability.

Unfortunately, IFIs mainly pay attention—both in terms of resources and funds—to supporting foreign direct investment. There are only a few IFI schemes available to support trade flows and hardly any for South-South trade, which for many emerging countries includes intraregional trade.28

Emerging countries are vulnerable to external shocks, high volatility in commodity prices, adverse business cycles in the industrialized countries, and corresponding movements in international savings. The external vulnerability is also due to inadequate domestic policies, lack of strong institutions, and myopic investors’ behavior. The latter is related to the substantial involvement of commercial banks in world trade and investment flows.

Banks have to find a balance between adverse selection and moral hazard by processing borrowers’ information. Banks’ actions (freezing or withdrawing trade lines) not only impact the activities of other investors (herd behavior or risk aversion), but also influence their own actions. Bank flows are highly volatile and an apparently small movement in absolute terms can have disproportionate effects. In times of financial crisis, banks will demand that borrowers supply all information needed to warrant funds to continue on the road of sustainable development and access to the international capital market.

Forms of Trade Finance Before and During a Financial Crisis

The number of players and products in the trade finance market is large. Each of the players has a distinct role as it faces different types of risk, such as performance risk, financial risk, credit risk and sovereign/cross-border risk. To complement their needs for protection and/or cover, the IFIs, export credit agencies, and private risk insurers all have developed products to mitigate these risks. For example, offshore accounts are used in preexport finance to offset transfer and inconvertibility risk. Of all the players, the commercial banks perform a dual role. On the one hand, they are absorbers of counterparty risk and, on the other, they are transaction processors, which makes them vulnerable to, in the case of trade finance, risk transferability and convertibility.

Simple instruments like documentary credits and letter of credit confirmations constitute the major part of facilitating international trade. Experiences with other instruments and risk mitigating tools have been mixed, but the following financing structures could be considered both in times of relative calm and during crises: (i) pre-export finance structures (although on a case-by-case basis); (iii) fully-fledged guarantees from local governments counterguaranteed by IFIs; (iv) the use of escrow accounts; and (v) joint IFI-private sector initiatives. A few of these instruments are highlighted below.

  • Pre-export finance structures grant payment/loan prior to export of goods and the proceeds of the sale of the goods are collected offshore. This has proved to be quite robust under a stress scenario (payment moratorium), and in a number of cases the exporters’ performance in crisis countries was not affected. It is key to focus on the financing of strategic commodities/products and the top players in the market, which represent low performance risk (e.g., in case of mining companies, typically the low-cost producers) and priority repayment over locally granted debt (via a pledge over export proceeds offshore). Experience with oil and gas clients in Russia (1998), tobacco merchants in Turkey (several crises), and agricultural exporters in Argentina (2002) has been positive, despite financial crisis situations. A concern sometimes is that governments/central banks set tight foreign currency regulations such as mandatory conversion of export proceeds, which may affect repayments.
  • In cases where financing institutions want more control over the use of proceeds from exports, pre-export structures can be tightened by using escrow accounts. The funds accrued on this account can only be used for previously agree-upon purposes. This typically works for exporting producers, which need to import raw materials prior to be able to export (semi-) finished products. These types of financing structures sometimes have been used to control the flow of goods under UN embargo situations (e.g., the oil-for-food program for Iraq).
  • Joint IFI-private initiatives can support trade, as in the case of the facility jointly established by ABN AMRO and the International Finance Corporation (IFC) in Pakistan. This facility represented the IFC’s first venture into trade finance after the Asian crisis. The ability for ABN AMRO to put in place a short-term, revolving risk-participated trade facility for Pakistan with the IFC facilitated a significant expansion of ABN AMRO’s existing cross-border commitments to Pakistan. The facility is structured on a 50/50 risk sharing basis for commercial as well as political risks. This 50/50 also reflects the risk fee distribution and recovery sharing in a default situation. Since the program’s inception, there have been no defaults. In addition, the risk mitigation component of this program has allowed a private sector lender such as ABN AMRO to venture into longer-term transactions than would have been normally possible. The facility helped to support Pakistan during times of particular political volatility and relative economic instability. The IFC and ABN AMRO partnership has made it possible for the IFC to provide Pakistan financial support, which is simple to administer and relies on ABN AMRO’s proven risk analysis abilities.29 Such a division of labor enhances the speed of the decision-making process and thereby the effectiveness of the financial support.

Treatment of Exposures and New Monies

Crisis-afflicted countries perceive international banks as either immediately freezing or reducing credit lines or raising costs and refusing to confirm letter of credits for their trade-related needs. However, this is not always the case, as banks that have existing exposures will be cautious about self-inflicting damage by fully withdrawing their trade facilities. In these instances, banks are most interested in getting clear signals from the debtor country in the form of guarantees or a credible forward-looking plan.

Examples of banks supporting crisis countries occurred with Turkey (2001) and Indonesia (1997). Turkey’s liquidity problems in June 2001 resulted in the international banks’ cautious stance, which translated into a reduction of credit facilities to Turkish banks. In a swift response, the Central Bank of Turkey, in a joint effort with the IMF, requested that these banks maintain their trade and banking lines open. The central bank clearly established its policies and timeframe to address the country’s liquidity problem and the Fund indicated its support. In this environment, ABN AMRO maintained its exposure under the trade lines but also indicated its willingness to meet the commercial needs of its clients.

The case of Indonesia in 1997 is also illustrative. The central bank requested that international banks maintain their exposure for trade finance as of a certain cutoff date (April 30, 1997). Payment of all new exposure and arrears was guaranteed, while exposures between the cutoff date and one year were not guaranteed. However, if the latter exposures were extended they would be considered as new credit and thus guaranteed.

Given the dramatic economic and social consequences of crisis (Box 3.1), country authorities should identify at an early stage which sectors are most vulnerable and unable to acquire sufficient working capital to carry out external trade. In so doing, the authorities will be able to define a credible plan and develop mechanisms to protect key local banks and allow some external trade to continue, especially for imports. On this, it is important that confidence be strengthened at an earlier stage than applying the mechanisms at a later stage.

Box 3.1.Impact and Victims of Financial Crisis

When a financial crisis erupts, the following parties in trade finance can be identified as victims, albeit to a different extent:

  • Sovereign borrowers. The impact is substantial because the sovereign is the lender in last resort to local importers and banks. The needed support in conjunction with declining budget revenues will heavily impair economic growth.
  • Local domestic banks. The impact is substantial because they will be faced with a steep rise in nonperforming loans because many of their clients have become less creditworthy and/or banks have to bail out the sovereign.
  • Local-currency-generating companies/hard currency borrowers. The impact is substantial because more local currency has to be made available to meet hard currency obligations. As a consequence, they will face difficulties in generating sufficient working capital at an acceptable cost to enable them to continue their business.
  • Hard currency generating companies/hard currency borrowers. Limited impact
  • Local currency generating companies/local currency borrowers. Limited impact
Source: ABN AMRO Bank.

Complementary or Competitive?

The growing involvement of private sector lenders in the restructuring of projects, debt, and other obligations has raised a number of questions. Will the restructuring become less orderly? Are public entities competing with or complementary to private sector entities? Should the Bretton Woods agencies continue to enjoy the preferred creditor status?

In general, there is no positive correlation between the number of creditors and a messy debt restructuring. The debt restructurings of the international debt crisis in the 1980s can be characterized as relatively orderly because they involved a limited number of actors, including sovereign borrowers, commercial banks, and IFIs.

With the progress in financial deregulation, both the number and types of borrowers and lenders increased, and debt became more diversified, including many asset classes under many different terms. As a consequence, restructuring with creditors as diverse as export credit agencies, commercial banks, capital market operators and IFIs has become a challenge. As each of them will have their own objectives, limitations, contractual rights and internal requirements. Thus far, workouts have been fairly orderly, and will continue to be so as long as all commercial creditors share in the burden of restructuring.

Our view is that public and private institutions should be complementary. Public export credit agencies and the IFIs have well-defined mandates and responsibilities to their taxpayers and stakeholders. They should not compete with the private sector by offering products that the private institutions can provide more efficiently and flexibly. On the other hand, IFIs should step in at times where private sector institutions need assistance, as they have a broader mandate to restore confidence, especially during times of financial crisis.

Despite the fact that emerging-country finance is shifting from IFIs’ credits to private sector credit, the IFIs will continue to serve as a catalyst to private investors. Finally, as both public and private entities share the burden proportionally during a crisis, it raises the question of whether the IFIs should continue to have a preferred creditor status in its present form.

Preferred Creditor Status: How to Proceed30

The IFI-supported trade facilitation programs to ease the pain in times of severe financial and economic crises should be welcome offerings. However, these programs will not break the vicious circle of external vulnerability and debt accumulation. Also, as an increasing number of creditors try to seek shelter under the same IFI preferred-creditor umbrella, there may not be enough protection for all the parties.

The international financial order has to be revisited and the fora to address this effectively are the Organization for Economic Cooperation and Development (OECD), the Paris Club and London Club, and IFIs. The patchwork done since the first Paris Club rescheduling in 1956 has created very chaotic situations and u-sustainable results for almost all stakeholders (major defaults/losses, capital destruction, decreased affordability human and socioeconomic disasters, etc.). Private institutions including ABN AMRO should take an active role in rethinking how development and financing of emerging countries can be done without these countries having to reschedule their debts sooner or later.

Shifting away from the absolute preferred creditor status would require the assessment of risks and competencies of the different parties. Some institutions might be better positioned to take certain risks than others. In this respect, we should look into the nature of the preferred creditor status (de jure or de facto) and the type of the borrower (sovereign or private).

De Jure versus De Facto Creditor Status

Both types of preferred creditor status do mitigate certain financial risks in emerging markets. From a legal point of view, a de jure preferred creditor status provides obviously more comfort than a de facto status. One could argue whether a de facto preferential creditor status would withstand a legal test if other creditors were to challenge it. For example, the preferred creditor status looks at odds with the Paris Club principle that a debtor country that has rescheduled its external debt with its sovereign creditors should seek equal treatment from its other creditors. Given the increasing debt problems of many emerging countries, it must be considered that the future may bring about disagreement between creditors on preferred creditor status.

Sovereign versus Private Borrowers

The relevance of the preferred creditor status and the level of comfort it provides to (co)lenders depends also on the nature of the borrower. If the borrower is the sovereign (i.e., ministry of finance or central bank), the preferred creditor status mitigates both the financial country risks and the borrower’s risks. On the other hand, if the borrower is a private sector borrower, the preferred creditor status only mitigates the financial country risks, but does not mitigate private sector borrowers risks, at least not to the same extent as it does in the case of a sovereign borrower.

Private sector institutions do need the leverage of IFIs to reduce their risks. Various restrictions on foreign fund movements (typically imposed by countries after payment default) expose private institutions to transferability and convertibility risks and can jeopardize recovery of their loans.

In these circumstances, the private sector institutions can still maintain their credit lines open if the public sector supplies comfort through comprehensive guarantees or at least de jure preferred creditor status (varying by type of crisis and project). Comprehensive guarantees—if structured with the requirements of private sector entities and capital markets in mind—can induce lenders to consider lending again and/or maintain current credit lines, but more importantly can lead to new money. In addition, guarantees are flexible instruments and can be tailor-made to any specific transaction, helping to enhance local capital markets and thereby increasing local currency funding. Sharing or granting de jure preferred creditor status would encourage private lenders not only to continue lending but even to supply the new money that is required.31

Lessons for Crisis Prevention and Resolution

In drawing lessons for the future, we point out eight aspects of crisis prevention and resolution. First and foremost, investor confidence needs to be sustained. The authorities of emerging countries need to address the country’s fundamental macroeconomic imbalances and structural weaknesses and maintain open channels of communication with creditors and investors, ideally through effective investor relations programs. Strong investor relations programs—involving regular and active dialogue between country authorities and their investors and creditors—would enable market participants to make sound risk management decisions and help authorities identify market concerns at an early stage. In this connection, debtor countries should work toward providing comprehensive, timely and accurate data to market participants, which is crucial for sound risk management and contributes to the stability of international financial markets.

Second, the authorities should have clear and articulate policy objectives (Box 3.2). For example, the central bank could clearly state that it will protect key financial institutions in the country to maintain the trade-related payment flows. The binding nature of these statements would augment market discipline and contribute to the country’s ability to attract the necessary funds.

Box 3.2.Selected Measures Taken by Countries to Safeguard Trade Finance

Indonesia (1997): Central Bank took proactive measures to make sure the normal trade flow continued by taking over the banks and the letters of credit.

Malaysia (1998): Actions taken by BNM affected trade because all settlement of exports and imports were to be made in foreign currency. Trade-related transactions in MYR from before September 1, 1998 were exempted.

Russia (1998): harsh measurements enacted, but trade was exempted.

Pakistan (1999): The central bank took firm measures to impose graduated margin requirements on trade imports, depending on the type of import (consumer products-35 percent; raw materials-10 percent). Strategic imports were exempted from such margin requirements. Normal trade flows continued while the central bank banned banks from making forward foreign exchange deals.

Turkey (2000/2001): New banking laws and depositary insurance fund with an IMF commitment gave comfort to keep bank lines open.

Brazil (2002): Clear policies and commitment to adhere to IMF program created sufficient confidence to continue trade finance.

Source: ABNM AMRO NV.

Third, the central bank’s international reserves should be used as a safety valve. It has been discovered from recent crises have that reserves were activated in order to stem currency volatility and bail out the domestic banking sector (moral hazard of lending). Part of the international reserves could be used to secure ample liquidity not only for a limited number of domestic banks but also for viable corporations key to the trade-flow process. An alternative would be to build up strategic reserves for the times when credit weakens, but on terms negotiated beforehand. These short maturity bridge funds would offer room for borrowers to restructure outstanding debt and/or seek long-term financing from both the private and public institutions for structural reform.

Fourth, weak domestic financial sectors—which have often been the catalyst for recent crises—should be strengthened, primarily through the combined efforts of policymakers, regulators, and bankers with support from IFIs, including the IMF, World Bank, and the BIS. In establishing priorities for action, it is essential for country authorities as well as the IMF and World Bank to engage in a permanent dialogue with market participants, both domestic and foreign. Market participants can impart a pragmatic perspective that can strengthen new programs.

Fifth, the international community should draw up rules of engagement defining principles that will support all stakeholders in coordinating their behavior and accepting their responsibilities. The rules should be such that they cover a broad range of crisis situations such as prevention and resolution stages. More importantly, the rules should be authoritative, comprehensive, focused, and transparent.32

Sixth, with regard to recurring trade transactions and especially in the case of strategic commodities, domestic banks in emerging countries should concentrate their relationships with relatively few international banks during the crisis-resolution period. This could help secure a continuing relationship and a steady flow of transactions and finance. Moreover, it would reduce performance risk and enhance an orderly workout, since all bank debt of a given emerging market involves the same type of general obligations, so there will be little conflict of interest among banks.

Seventh, it is important to develop long-term investing institutions and bond markets denominated in domestic currency. This would enhance the borrowing capacity of firms producing for the domestic market without introducing the financial fragility that comes with currency mismatches.

Finally, assistance and support from the IMF and World Bank, in the context of a strong adjustment program, is essential. Both institutions represent a continuing source of financial support for countries in crisis and can play a special role in signaling to other financial institutions whether or not to cut off lending to a particular country.

Emerging Themes and the Way Forward

Greater predictability could help facilitate investors’ assessment, pricing, and management of risks, and hence contribute to improving the efficiency of the allocation of capital. The new focus on market-oriented frameworks and development schemes is well established, are private capital flows and export promotion schemes. In our view, the task of the IFIs must be to facilitate these processes, as they have the potential to further expand the frontiers of private sector involvement and development in emerging economies. In order to do so, the IFIs must continue to adapt and build on their strengths. Private sector partners, especially banks, are powerful and dynamic partners in these efforts, which should be harnessed by the IFIs. Taking advantage of public and private institutions’ comparative advantages will benefit both the international financial system and the emerging countries.

As indicated earlier, trade and investment are connecting our world tightly together more than ever, but it remains a world of different economic systems, different interests and backgrounds, and very different levels of development. In addition to the need for greater cooperation and consensus, we have to provide leadership when mobilizing collective effort in times of crisis, as we have not yet articulated a clear vision of what the new financial and trade architecture should look like. This will be far from straightforward at a time where we are urging a common denominator, i.e., developing a sustainable financial framework resilient to shocks.

Looking forward, one area that deserves particular attention is the promotion of intraregional trade. The extensive expansion of intraregional trade is an important aspect of the integration of emerging economies into the global trading system. A higher degree of integration of trade and production will also bring about increasing intraregional financial flows, making emerging-market economies less dependent on external finance from industrialized countries (Figure 3.1).

Figure 3.1.Intra- and Interregional Trade by Region

(In percent of total trade for each region)

Source: World Bank.

One of the major benefits of intraregional trade is that the emerging economies can benefit from being complementary. The comparative advantages of countries of a region could then translate into a more diversified regional export basket. Despite many initiatives having been undertaken in recent years, there is a need to develop an institution to promote exports among emerging countries by effectively providing medium-and long- term export credit insurance.

Ideally, such an institution should be a multilateral export credit insurance company to be funded and supported by governments from emerging markets and developed countries and the private sector. It would focus its insurance activities both in the area of nonmarketable and marketable risks.33 By supporting exports from emerging markets, this institution would allow exporting emerging markets to generate additional hard currency income, which would strengthen their external positions. Alternatively, greater use of emerging-market export credit agencies to support trade between emerging markets, in particular the South-South trade of capital goods, could become an integral part of more proactive crisis management.

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