The World
Trillions of dollars in short-term credit move goods across borders every day. When that financing dries up, inflation hits households worldwide within weeks.
Every container ship crossing the Pacific, every lorry moving goods through ports, every factory waiting for raw materials carries an invisible financial burden: the cost of short-term credit that keeps global trade moving. Supply chain finance-the machinery that funds goods in transit-underpins prices from your local grocery to your car dealership. When this system tightens, inflation follows within weeks across continents.
Most international trade doesn't happen on a handshake. A Chinese manufacturer ships electronics to a retailer in Europe, but payment doesn't arrive for 30, 60, or even 90 days. The manufacturer needs cash immediately to pay workers and buy more materials. Banks bridge this gap by providing short-term loans secured by the goods in transit or by the buyer's promise to pay. This financing typically costs 2 to 5 percent annually, and trillions of dollars cycle through it constantly. Without this credit, global trade would halt within days.