The language of trade

The ability to produce a good more efficiently, using fewer resources, than another producer. Adam Smith's earlier idea, which David Ricardo refined into comparative advantage by showing that trade can still benefit a country holding no absolute advantage at all.

Bridge's trade finance exchange: verified trade documents become financeable digital assets that banks, DFIs, and lenders compete to fund.

A drawee’s signed agreement to pay a bill of exchange at maturity, turning the bill into a binding payment obligation.

Funding that lets a buyer settle supplier invoices early while repaying the financier on the original due date.

The proposed Africa Credit Rating Agency: a continental institution intended to counter the bias African issuers face from the dominant global rating agencies.

A payment made by the buyer before goods are shipped, usually secured by a guarantee that refunds the buyer if the seller does not deliver.

A guarantee securing the repayment of an advance payment if the supplier fails to perform its contractual obligations. Typically 10 to 25% of the contract value, often entering into force only once the advance is received.

Negative news about a person or entity, screened during due diligence as a signal of financial-crime, sanctions, or reputational risk.

The bank in the beneficiary's country that authenticates a letter of credit and passes it on. It does not take on payment risk unless it also confirms the credit.

The Africa Finance Corporation, a pan-African multilateral that finances infrastructure and industrial assets across the continent.

The African Continental Free Trade Area: an agreement to create a single market for goods and services across African states, lowering tariffs and harmonising trade rules.

The African Export-Import Bank: a multilateral trade-finance institution that supports and develops intra- and extra-African trade, and the backer of PAPSS.

The excess cost of capital charged to African borrowers beyond what their actual default experience would justify, attributed largely to uncertainty, illiquidity, and monitoring cost rather than true default risk.

The continent's principal multilateral development bank, financing infrastructure and development across African states.

The continental body of African states promoting political and economic integration, and the parent of both the AfCFTA agreement and the African Peer Review Mechanism.

AI built as specialised agents that can take actions within defined policy boundaries, rather than only answering questions. At Bridge, each agent leaves an auditable decision trail.

A transport document for goods carried by air. It is a receipt and a contract of carriage, but unlike a bill of lading it is not a document of title.

The repayment of a debt in scheduled instalments, each covering interest and a portion of the principal.

The large, creditworthy company at the centre of a supply chain finance programme, whose strong credit standing lets its smaller suppliers be financed cheaply.

The laws, controls, and procedures that detect and prevent the disguising of illicit funds as legitimate income.

An application programming interface: a defined way for software systems to connect and exchange data. How institutions integrate their systems with Bridge.

The buyer who asks their bank to issue a letter of credit in favour of a seller. Also called the account party.

A private process in which parties settle a trade dispute before an appointed tribunal rather than in court, producing a binding award.

A regional multilateral development bank financing growth across Asia and the Pacific, and the runner of one of the largest trade finance programmes among the development banks.

The time it takes a company to purchase raw materials, convert them into finished goods, sell them, and receive payment. The physical expression of working capital at work.

A security whose payments come from a pool of underlying assets such as loans, leases, or receivables.

Revolving finance secured against a borrower's receivables and inventory, with the available amount rising and falling as that asset pool changes. Broader than a single borrowing base.

The transfer of rights, benefits, or obligations under a trade document—such as a letter of credit or insurance policy—from one party to another.

An instruction under a letter of credit directing that some or all of the payment go to a third party, such as the beneficiary's own supplier. Unlike a transferable credit, it assigns money, not the right to perform.

Settlement where the two legs of a transaction, such as payment and delivery, either both complete or both fail, removing settlement risk.

The doctrine that a letter of credit or demand guarantee is independent of the underlying contract. Banks deal in documents, not goods, and must pay against compliant documents regardless of disputes between buyer and seller. Also called the independence principle.

A guarantee of payment added to a bill of exchange or promissory note by a third party, often a bank. Common in forfaiting, where it makes the instrument financeable.

Two linked letters of credit, where an intermediary uses an incoming credit from its buyer as support to open a second credit to its own supplier.

Two linked credits where an intermediary uses an incoming letter of credit as security to open a second one in favour of the actual supplier.

A market condition where the spot price of a commodity exceeds the futures price, typically signalling tight current supply or strong immediate demand.

The Bankers Association for Finance and Trade, an industry association for organisations active in transaction banking and trade finance.

A country's complete record of transactions with the rest of the world over a period, split into the current account (trade and income) and the capital and financial account (investment and lending).

The central bank for central banks, based in Basel, that hosts the Basel Committee on Banking Supervision and coordinates international monetary and financial cooperation.

An independent undertaking by a bank to pay a beneficiary if the applicant fails to perform an obligation. Demand guarantees are governed by the ICC's URDG 758.

An irrevocable undertaking by one bank to pay another on the matching of electronic trade data, governed by the ICC's URBPO. A data-driven alternative to the letter of credit.

A surge of depositors withdrawing at once for fear a bank cannot pay. Because banks lend out most deposits, even a sound bank can fail if too many withdraw together, which is why lenders of last resort exist.

A time draft drawn on and accepted by a bank, which thereby guarantees payment at maturity. A tradable short-term instrument.

The direct exchange of goods or services for others, with no money changing hands. The simplest form of countertrade.

The international banking standards set by the Basel Committee, governing how much capital banks must hold against their risks. The current framework is Basel III.

The Basel Committee on Banking Supervision, hosted by the BIS, which sets the global standards for bank capital, liquidity, and risk that make up the Basel Accords.

The seller in whose favour a letter of credit is issued, and who is paid once compliant documents are presented.

Processing raw materials into higher-value products before export, such as refining bauxite into alumina or ginning raw cotton. A recurring policy objective across African commodity-producing states.

An international association of credit and investment insurers, founded in 1934, whose members include all ECAs active in medium and long-term export finance.

A guarantee, usually 1 to 5% of a contract's value, that the winning bidder in a tender will sign the commercial contract on the terms it proposed. Also called a tender guarantee.

A written, signed order from one party to another to pay a fixed sum on demand or at a set future date. A core negotiable instrument in trade.

A document issued by a carrier acknowledging goods received for shipment. It is a receipt, evidence of the contract of carriage, and a document of title that can transfer ownership of the goods.

A type of distributed ledger where records are grouped into cryptographically linked blocks, making the history tamper-evident and hard to rewrite.

A tradeable debt security under which the issuer borrows from investors, pays periodic interest, and repays the principal at maturity.

A customs-controlled warehouse where imported goods are stored with duty and tax suspended until they are released for sale or re-exported. A way to manage cash flow and defer duty.

A lending facility sized against the value of eligible collateral, typically commodity inventories or receivables, and recalculated periodically as the collateral pool changes.

The holding company behind the BridgeOS, headquartered in Lagos, Nigeria. Founded in 2020 as a payments solution for importers, it pivoted to trade finance advisory before building Bridge as the infrastructure layer beneath it.

The 1944 conference that created the post-war monetary order: the dollar, convertible to gold at $35 an ounce, as the anchor of the global system. It also created the IMF and the World Bank. The system collapsed in 1971 when the US suspended convertibility.

Short-term financing that covers a funding gap until longer-term facilities or expected receipts come through.

The operating system beneath every Bridge application: the digital trust layer of primitives, protocols, and services that applications inherit rather than rebuild.

Bridge's newsletter on the infrastructure of trade, banking, and African financial architecture.

A lower-cost form of factoring where the factor advances against the whole sales ledger but leaves collection and credit control with the seller. Cheaper than full-service factoring, with fewer services attached.

A countertrade arrangement where a supplier of plant or equipment is repaid, in whole or part, with the output that equipment later produces. Also called compensation trade.

An export credit structured as a loan from a bank to the importer, separate from the commercial contract, and covered by the exporter's ECA. The standard form for large capital-goods deals.

The part of the balance of payments recording cross-border investment and lending flows, as opposed to the current account's trade and income. Sometimes called the financial account.

The ratio of a bank's capital to its risk-weighted assets, the central metric of the Basel framework. A higher ratio means a larger buffer to absorb losses before depositors are affected.

Measures restricting the flow of money across a country's borders, such as limits on foreign-currency purchases or investment. One of the three levers in the impossible trinity.

The rapid movement of money out of a country, usually to escape currency collapse, instability, or capital controls. It drains reserves and can deepen the very crisis that triggers it.

A complete list of all cargo carried on a vessel or conveyance, compiled by the carrier and used for customs clearance, handling, and reconciliation at the port.

A collection arrangement where shipping documents are released to the buyer only on payment. Also called documents against payment (D/P).

The number of days between paying suppliers and collecting from customers, calculated as DSO plus DIO minus DPO. A lower CCC means faster cash generation; trade finance instruments are the key tools for improving it.

A payment method in which the buyer pays the seller before goods are shipped. The most secure arrangement for the seller and the riskiest for the buyer, it sits at the opposite end of the payment-risk spectrum from open account.

Aggregating balances across multiple accounts to minimise interest paid and maximise interest earned, creating a single net position. Can be national or cross-border, physical or notional.

The institution that manages a country's currency, money supply, and monetary policy, and acts as lender of last resort to the banking system. Examples include the Federal Reserve and the Central Bank of Nigeria.

A digital form of a country's official currency, issued and backed by its central bank. Unlike a stablecoin, it is public money in digital form, and several are being piloted for faster cross-border settlement.

A document certifying that goods, typically chemicals, pharmaceuticals, or commodities, meet a specified composition or quality standard, issued after laboratory testing.

A document certifying the country in which goods were produced, used for customs, tariffs, and trade-agreement eligibility.

Latin for 'all else being equal'. The working assumption, used to isolate the effect of one variable, that everything else stays unchanged. A staple of economic reasoning.

A bill of lading issued under a charter party, the contract hiring a vessel. Common in bulk commodity shipping, it incorporates the charter's terms and is treated cautiously by banks under credits.

China's Cross-Border Interbank Payment System, which clears and settles payments in renminbi internationally. Part of the gradual diversification away from a single dominant settlement currency.

Commercial Interest Rate of Reference: the minimum official fixed rate for ECA-supported export credits, calculated as government bond yields plus 100 basis points and published monthly by the OECD.

The UN Convention on Contracts for the International Sale of Goods (1980), also called the Vienna Convention, which sets default rules for cross-border sales contracts between businesses in member states.

A clean bill of lading bears no notation of damage or shortage; a claused (or 'dirty') bill records a defect in the goods or packaging. Letters of credit almost always require a clean bill, so a claused one can block payment.

A collection of financial documents, such as a bill of exchange, with no shipping documents attached. Used where goods have been sent directly to the buyer, leaving only payment to be collected through the banks.

An institution that stands between the two sides of a trade as buyer to every seller and seller to every buyer, guaranteeing settlement and removing counterparty risk. Also called a central counterparty (CCP).

An asset a borrower pledges to secure a loan, which the lender can claim on default. It reduces loss given default and so lowers the cost of credit.

An arrangement in commodity trade finance where an independent collateral manager takes control of goods on the lender's behalf, holding them in a designated store and releasing them only on instruction. It gives the financier real control over its security.

A security backed by a pool of debt instruments and sliced into tranches of differing risk. The instrument at the centre of the 2008 financial crisis.

A securitisation backed by a pool of corporate loans, now the largest private-label securitised asset class.

Controls aimed at detecting and stopping funds destined for terrorism. Usually paired with AML as an institution's financial-crime programme.

A bank that takes deposits and makes loans to businesses and individuals, earning the spread between them. The institution most people mean by 'a bank'.

The seller's bill for goods, listing description, quantity, value, and terms. The reference document for customs valuation and payment.

Short-term, unsecured debt issued by companies to fund near-term needs, typically maturing within 270 days. A core money-market instrument.

A regulated marketplace where standardised commodity contracts are traded, providing price discovery, liquidity, and clearing. Examples include the LME for metals and CME for energy and agriculture.

Financing arranged against the value of commodities in motion, from extraction through processing to delivery, with the commodity itself as the primary collateral.

The OECD framework for assessing the environmental and social impact of projects backed by official export credits, classifying them into categories that determine the level of due diligence and disclosure required.

The highest-quality bank capital, made up of common shares and retained earnings. The CET1 ratio, CET1 to risk-weighted assets, is the headline gauge of a bank's strength under Basel III.

A stage of economic integration beyond a customs union, adding the free movement of labour and capital to free trade in goods and a common external tariff. The next rung up the integration ladder.

The principle, formalised by David Ricardo, that countries gain from trade by specialising in what they produce at the lowest relative cost, even if one country is more efficient at everything. The theoretical engine behind why nations trade.

A second bank's addition of its own binding undertaking to pay under a letter of credit, on top of the issuing bank's. It gives the seller a local, creditworthy party to look to and removes issuing-bank and country risk.

A bank, usually in the seller's country, that adds its own undertaking to pay alongside the issuing bank, so the seller relies on a local, known counterparty.

The method by which a distributed network agrees on the single valid state of its ledger, without relying on a central authority.

A transport document for carriage by road (the CMR note) or rail (the CIM note). It is a receipt and evidence of the contract of carriage, but unlike a bill of lading it is not a document of title.

A market condition where the futures price of a commodity exceeds the spot price, typically indicating ample current supply or high storage and financing costs.

An arrangement where one bank holds accounts for another to provide services, such as payments, in a currency or country where it has no branch. The traditional, multi-hop way cross-border value moves.

A guarantee under which one bank instructs a second, usually local, bank to issue its own guarantee to the beneficiary. Common in cross-border guarantees.

Controls to prevent the financing of weapons-of-mass-destruction proliferation, increasingly required alongside AML and CFT.

A countertrade arrangement where the seller agrees to buy unrelated goods from the buyer's country, up to an agreed value, as a condition of the original sale.

Trade in which goods or services are exchanged in whole or part for other goods rather than cash. Common where hard currency is scarce, it takes forms such as barter, counterpurchase, buyback, and offset.

The fixed periodic interest a bond pays its holders, expressed as a percentage of face value. Together with price, it determines the bond's yield.

A bond backed by a ring-fenced pool of assets that stays on the issuer's balance sheet, giving investors recourse to both the issuer and the pool. The Pfandbrief, dating to 1769, is the oldest example.

The Basel factor that converts an off-balance-sheet exposure, such as an undrawn commitment or a guarantee, into a credit-equivalent amount for capital purposes. Standbys and guarantees attract high CCFs.

A contract that transfers the risk of a borrower defaulting from one party to another for a periodic fee, in effect insurance against default.

Techniques that lift the credit quality of a securitisation, such as over-collateralisation, reserve funds, or subordinated tranches, to win higher ratings.

Cover that pays out if a buyer fails to pay, transferring the risk of non-payment from a seller or lender to an insurer.

In factoring, the factor's assumption of the risk that a buyer fails to pay due to financial difficulty. It covers insolvency, not trade disputes, and defines non-recourse factoring.

A firm that assesses the creditworthiness of borrowers and instruments and assigns the ratings that shape their cost of borrowing. The market is dominated by a small number of global agencies whose treatment of emerging-market issuers is widely contested.

The risk that a borrower or counterparty fails to meet an obligation, in full or on time. The largest risk category at most banks, and the risk trade finance exists to manage.

The extra yield a borrower pays over a risk-free benchmark to compensate lenders for credit risk. The price of risk, expressed in basis points.

A funded security whose repayment is tied to the credit performance of a reference obligation. If the reference defaults, the investor absorbs the loss. A building block of synthetic securitisation.

A digital signature that binds an action to an identity using cryptography, proving who approved something and that it has not changed since.

The broadest measure of a country's trade with the world: the balance of goods and services plus net income and transfers. A persistent deficit must be financed by borrowing or investment from abroad.

Current assets divided by current liabilities, measuring a company's ability to meet its short-term obligations. Also called the working capital ratio.

The checks used to verify a customer's identity and assess their risk. Enhanced due diligence (EDD) applies deeper scrutiny to higher-risk customers.

The formal statement to customs describing imported or exported goods, their value, and classification, used to assess duties and clear the border.

A group of countries that removes internal trade barriers and adopts a common external tariff, going one step further than a free trade area. The EU began as one.

The average number of days a company holds inventory before selling it, calculated as average inventory divided by cost of goods sold per day.

The average number of days a company takes to pay its suppliers, calculated as average accounts payable divided by cost of goods sold per day. Longer DPO improves working capital.

The average number of days cash is tied up in receivables, calculated as average accounts receivable divided by revenue per day. Shorter DSO improves working capital.

The Digital Container Shipping Association: a body that publishes open standards for container shipping, including a standard for the electronic bill of lading.

The withdrawal of banks from clients, sectors, or entire regions perceived as too risky or too costly to serve under current regulation. Correspondent banking relationships with African banks have been a prominent casualty.

Whether a government can service its debt without an ever-rising burden or default. Assessed against measures such as the debt-to-GDP ratio and the cost of borrowing.

A country's total public debt as a share of its annual output. A headline gauge of how heavy a debt burden is, and a key input to debt-sustainability and sovereign-rating judgements.

A globally unique identifier an entity controls directly, without a central registry, used to anchor verifiable credentials and digital identity.

A letter of credit where the issuing or confirming bank undertakes to pay on a fixed future date after compliant documents are presented, rather than at sight. Can be discounted to accelerate the seller's cash flow.

A document instructing the party holding goods, such as a carrier or warehouse, to release them to a named party. Often issued at destination in exchange for the bill of lading.

A guarantee payable on the beneficiary's compliant written demand, independent of the underlying contract. The standard form of bank guarantee in trade, governed by URDG 758.

Replacing a paper instrument with an electronic record that carries the same legal and commercial function, the core shift behind digital bills of lading and negotiable instruments.

A government-backed guarantee that protects depositors up to a set limit if their bank fails. By reassuring depositors, it reduces the incentive to join a bank run.

A contract whose value derives from an underlying asset, rate, or index, such as a future, forward, option, or swap. Used to hedge risk or to take a position without owning the underlying.

A deliberate reduction in a currency's official value under a fixed or managed regime. It makes exports cheaper and imports dearer, but raises the burden of foreign-currency debt.

An institution whose shareholders are governments, oriented toward reducing poverty and financing development. DFIs include multilateral banks like the World Bank and regional banks like the AfDB.

A document that is the single authoritative version of itself, verifiable and controllable like a paper original rather than one of many indistinguishable copies.

Bridge's term for infrastructure that computes trust from verifiable data, rather than assuming it from relationships or reputation.

A structured digital model of a physical object or process, kept in sync with the real thing. On Terminal, a live model of goods and shipments in motion.

Any way in which presented documents fail to comply with the terms of a credit. Discrepancies can delay or block payment until waived or corrected.

A database shared and synchronised across multiple parties with no single master copy. Blockchain is one kind of distributed ledger.

Financing that lets a distributor buy goods from a manufacturer, repaid as the distributor sells on. A buyer-led supply chain finance technique anchored on the manufacturer's relationship.

ITFA's Digital Negotiable Instruments Initiative, which works to make electronic bills of exchange and promissory notes legally enforceable and commercially usable, building on laws like MLETR.

A settlement method where banks pass shipping documents from seller to buyer against payment or acceptance, without guaranteeing payment. Governed by the ICC's URC 522.

The formal name for a letter of credit: a bank's written undertaking to pay the seller once they present documents that comply with the stated terms.

A documentary collection in which the buyer accepts a time draft, undertaking to pay at a future date, and receives the shipping documents in exchange. The seller gives up control of the goods before payment, unlike documents against payment.

The widespread use of the US dollar alongside or instead of a country's own currency, whether through official adoption or de facto market preference. Common where local currencies are unstable or mistrusted.

A bill of exchange used to demand payment under a documentary credit or collection, drawn by the seller on the buyer or a bank. Payable at sight or at a stated future date.

Items with both civilian and military or weapons applications, subject to export controls. Screening for them forms part of counter-proliferation financing.

Exporting goods below their normal home-market value or below cost. Importing countries may respond with anti-dumping duties where it causes injury to domestic industry.

Checking a trade document against a wider record to ensure the same invoice, bill of lading, or receipt is not financed by more than one lender at once.

The economic harm caused when a booming export sector, typically natural resources, strengthens the currency and makes other exports uncompetitive. Named after the Netherlands' experience with North Sea gas in the 1960s.

A buyer-led arrangement where the buyer uses its own cash to pay suppliers early at a discount that adjusts with the number of days accelerated, without bank involvement.

The deepest stage of regional integration, where members share a common market plus harmonised economic policy and often a single currency. The rung above a common market, as in the European Union.

The global network of financial intelligence units that lets them share information and cooperate on money-laundering and terrorist-financing cases across borders.

The EU regulation on electronic identification and trust services, which gives qualified electronic signatures and seals defined legal effect across member states.

A bill of lading issued and transferred digitally, carrying the same legal function as paper where laws like MLETR are in force. Removes courier delay and the risk of lost or forged originals.

The delivery of trade documents to a bank as electronic records rather than paper, governed under credits by the eUCP. Removes courier delay from the documentary cycle.

The UK law (in force September 2023) that gives electronic trade documents, such as bills of lading and bills of exchange, the same legal standing as paper under English law. Because most trade runs on English law, it is one of the most consequential enactments of MLETR.

Singapore's adoption of MLETR (2021), which gives electronic transferable records legal recognition. Alongside the UK's ETDA, it made Singapore an early hub for digital trade documents.

Encoding data so only authorised parties can read it. The foundation of confidential storage and transmission of sensitive information.

The deeper scrutiny applied to higher-risk relationships, such as politically exposed persons or high-risk jurisdictions, going beyond standard customer due diligence.

A voluntary risk-management framework adopted by banks, built on the IFC's environmental and social standards, to assess and manage that risk in project finance. The benchmark most commercial project lenders apply.

An ownership stake in a company, ranking behind all debt but sharing in profits and growth. The counterpart to debt in the capital structure.

An arrangement where a neutral third party holds funds or documents and releases them only once agreed conditions are met. Widely used to control cash flows in structured trade finance.

A US federal law giving electronic signatures and records the same legal validity as their paper equivalents in interstate commerce.

A supplement to UCP 600 (current version 2.1) that adapts the rules of documentary credits to the electronic presentation of records alongside or instead of paper.

The electronic supplement to URC 522, extending the collections rules to electronic records.

A bond issued in a currency other than that of the country where it is sold, often used by emerging-market sovereigns and corporates to raise hard-currency finance from international investors.

A US dollar held in a bank outside the United States, beyond the reach of US banking regulation. The eurodollar market that grew from the 1960s created the first large pool of offshore money and seeded modern shadow banking.

A clause in a guarantee or standby that automatically renews it for further periods unless the issuer gives notice of non-renewal by a set deadline before expiry.

The Ethereum Virtual Machine: the runtime that executes smart contracts. An 'EVM-compatible' chain can run the same contracts and tooling.

The system a country chooses for setting its currency's value, from a hard peg or currency board through a managed float to a free float. The choice is constrained by the impossible trinity.

The amount a lender can expect to lose on average from a credit, calculated as probability of default times exposure times loss given default.

The idea, formalised by Daniel Bernoulli in 1738, that people value outcomes by their usefulness rather than their raw monetary amount. An early foundation of risk theory.

A loan financing an export contract and secured by an Export Credit Agency. Durations typically range from 3 to 25 years, structured as either a buyer's credit or a supplier's credit.

A public or publicly backed institution that supports national exports through guarantees, insurance, and sometimes direct lending. The world's first was the UK's ECGD, established in 1919.

A development strategy of growing by producing for world markets rather than substituting imports. The model behind the East Asian 'miracle' economies.

The total amount a bank expects to be owed at the moment a borrower defaults, including drawn balances and likely drawdowns on committed but undrawn facilities.

Bridge's trade finance product: documentary credits and collections issued, examined, and settled digitally, with settlement through PAPSS.

A demand under a guarantee that asks the issuer to extend the validity period or else pay. If the extension is refused, a complying request becomes a valid demand for payment. The instructing party decides; the guarantor is not obliged to extend.

The sale of short-term trade receivables to a third party (a factor) at a discount, often bundled with collection and ledger services, for immediate cash.

A screening alert that wrongly flags a legitimate party as a risk. High false-positive rates are a major hidden cost of manual compliance.

The Financial Action Task Force: the inter-governmental body that sets the global standards for AML and CFT that national regimes are measured against.

Formerly Factors Chain International: the world's largest network for international factoring, with over 400 members in about 90 countries. Provides a communication platform, standard rules, and arbitration.

The International Federation of Freight Forwarders Associations, which publishes standardised forwarding documents such as the FCR and the FIATA bill of lading used across global logistics.

The point at which a transaction is irreversibly settled and can no longer be changed or reversed. Anchoring to a public Layer 1 provides strong finality.

A national agency that receives and analyses reports of suspicious financial activity. Nigeria's is the NFIU.

An international body set up after the 2008 crisis to monitor the global financial system and coordinate regulation across countries and standard-setters.

A government's use of taxation and public spending to influence the economy, the counterpart to monetary policy. Persistent deficits add to public debt.

Inventory finance for dealers, where a lender funds stock such as vehicles or equipment on the showroom floor, repaid as each item is sold. Also called floorplanning.

One of Bridge's four primitives, the control layer: every document and event for a trade in one governed dossier with role-based access and approvals.

A clause, reflected in UCP 600 Article 36, excusing a party from performance when prevented by events beyond its control, such as war or natural disaster. Banks are not liable for the consequences of such interruptions.

Cross-border investment in which an entity takes a lasting ownership stake in a business abroad, as opposed to passive portfolio investment. A key source of long-term capital and technology for developing economies.

The stock of foreign currency and gold a central bank holds, used to settle international obligations, defend the currency, and underpin confidence. Often measured in months of import cover.

The purchase of longer-dated trade receivables, usually without recourse to the seller, so the exporter is paid up front and the financier carries the payment risk.

A private agreement to buy or sell a commodity at a set price on a future date, tailored to the parties' needs. Unlike a futures contract, it is not standardised or exchange-traded.

A document in which a freight forwarder confirms it has taken irrevocable possession of goods for dispatch to a named consignee. The FIATA FCR is the standard form, used where a buyer wants proof of dispatch and control before goods move.

Bridge's foundational services, Origin, Verify, Folder, and Sign, that every application on BridgeOS™ inherits rather than rebuilds.

The principal exception to the autonomy principle: a court may halt payment under a credit or guarantee where clear fraud is established. The basis on which a preliminary injunction is sought.

The doctrine that goods and capital should cross borders with minimal tariffs or restrictions, on the argument that specialisation and open exchange leave all parties better off. The intellectual opposite of protectionism and mercantilism.

A group of countries that have eliminated tariffs and other trade barriers among themselves while each maintains its own external tariffs. The AfCFTA is the world's largest by number of member states.

Raising finance against expected future receivables, such as remittances or export revenues. It can let an issuer borrow at a rating above its sovereign's ceiling.

A standardised agreement, traded on an exchange, to buy or sell a commodity at a set price on a future date. Used for hedging and price discovery.

The fee paid to execute a transaction or computation on a blockchain, priced to compensate the network for the work and to deter spam.

The General Agreement on Tariffs and Trade (1947): the treaty framework that governed world trade for nearly fifty years before being succeeded by the WTO in 1995. Its principles of most-favoured-nation treatment and national treatment remain the backbone of trade law.

The Global Legal Entity Identifier Foundation, the body that oversees the LEI system and keeps the identifiers unique, accurate, and openly available.

The cross-border sequence of stages, from raw materials to finished goods, through which a product is designed, made, and sold. Most modern trade is in intermediate goods moving along these chains.

A reporting application developed by the UN Office on Drugs and Crime and used by financial intelligence units, including Nigeria's NFIU, to receive suspicious-transaction reports.

A monetary system in which a currency's value is fixed to a defined quantity of gold. It anchored the global system for much of the 19th and early 20th centuries before being abandoned in stages.

A letter of credit that allows the beneficiary to draw advances before shipment against evidence that goods have been stored or warehoused, adding a layer of security beyond a red clause credit.

General Rules of International Factoring: the FCI rules governing the rights and responsibilities of export and import factors in a two-factor international factoring arrangement.

The total value of goods and services a country produces in a period. The standard measure of the size of an economy.

A global standards organisation behind product identifiers and barcodes (such as the GTIN), widely used to identify goods across supply chains.

An international convention setting the rights and liabilities of carriers under bills of lading for goods carried by sea.

A 1978 UN convention on the carriage of goods by sea that places more liability on carriers than the Hague-Visby Rules. Adopted by fewer major trading nations.

A widely trusted, freely convertible currency, such as the US dollar or euro, that holds its value and is accepted in international trade. The inability to borrow in one is the essence of original sin.

A fixed-length digital fingerprint of data. Any change to the input produces a completely different hash, which is how integrity is checked without revealing the data itself.

A lightly regulated fund that pools capital from sophisticated investors and pursues returns through leverage, derivatives, and complex strategies. A significant part of the shadow banking system.

Using a financial instrument, such as a forward or futures contract, to offset the risk of adverse price movements in a physical position. The way commodity producers and traders lock in margins.

A country flagged by the FATF, through its grey or black lists, for weak controls against money laundering and terrorist financing. Dealings touching such jurisdictions attract enhanced scrutiny.

A person who takes a negotiable instrument in good faith and for value, without notice of any defect, and so acquires it free of most prior claims and defences. The doctrine that makes bills of exchange and promissory notes safely transferable and financeable.

The model of the perfectly rational, self-interested actor who always maximises their own benefit. A simplifying assumption of classical economics that behavioural economics has steadily qualified.

A bill of lading issued by a freight forwarder to its customer, as distinct from the master bill the carrier issues to the forwarder. Common in consolidated shipments.

A Harmonized System code: a standardised numeric classification for traded products, maintained by the World Customs Organization and used worldwide for tariffs and statistics.

The International Chamber of Commerce: founded in 1919 and the largest business organisation in the world, representing tens of millions of companies. Its Banking Commission authors the rulebooks that govern most of trade finance, including UCP 600, URC 522, and URDG 758, and the ICC also maintains Incoterms.

The ICC's Digital Standards Initiative, which works to align and accelerate the adoption of digital trade standards worldwide.

An ICC dataset pooling default and loss data across banks, used to demonstrate that trade finance is among the lowest-risk asset classes in banking.

The International Finance Corporation, the World Bank Group's private-sector arm, which invests in and lends to private enterprises in developing economies. Its environmental and social performance standards underpin the Equator Principles.

A Shari'ah-compliant lease in which the financier owns an asset and rents it to the client, who may acquire it at the end. The Islamic equivalent of leasing or hire-purchase.

An append-only record that cannot be altered after the fact, so the history of who did what, and when, can be relied on.

A direct limit on the quantity of a good that may be imported over a period. A non-tariff barrier that restricts supply rather than raising price directly.

A development strategy of replacing imports with domestic production behind protective barriers. Widely pursued in mid-20th-century Africa and Latin America, with mixed results.

A government authorisation required to import or export specified controlled goods, such as arms, dual-use items, or restricted commodities. A condition of lawful shipment where it applies.

The principle that a country cannot simultaneously maintain a fixed exchange rate, free capital movement, and independent monetary policy: it must give up one. Also called the trilemma. Explains why central banks make the choices they do.

ICC trade terms (current set: Incoterms 2020) that define, in three letters, where responsibility for cost, risk, and delivery passes between buyer and seller, such as FOB or CIF.

The case that a new domestic industry deserves temporary protection until it grows strong enough to compete internationally. The classic justification for tariffs in developing economies.

A sustained rise in the general price level, eroding the purchasing power of money. Central banks aim to keep it low and stable through monetary policy.

A situation where one party to a transaction knows more than the other, giving rise to problems such as adverse selection and moral hazard. The trust and data gap it creates is what trade finance and independent verification exist to close.

A document from an independent inspector confirming goods meet the agreed quantity, quality, or specification, usually before shipment.

A document evidencing that a shipment is covered by cargo insurance, frequently required under CIF and CIP terms.

The Basel framework under which banks use their own models to estimate PD, LGD, and EAD for each exposure, rather than applying the regulator's fixed risk weights. Requires supervisory approval most emerging-market banks do not have.

The Bretton Woods institution that oversees the international monetary system, provides balance-of-payments support to member countries, and conducts economic surveillance. Its lending conditions have shaped economic policy across the developing world.

The ability of separate systems or networks, such as different blockchains or messaging standards, to exchange and act on data without bespoke integration each time.

Funding extended against goods held in stock, often commodities in a warehouse, letting a company free up cash tied in unsold inventory.

A bank that helps companies and governments raise capital, trade securities, and execute mergers, earning fees and trading income rather than a deposit-and-loan spread.

Adam Smith's metaphor for how individuals pursuing their own interest can, through markets, produce outcomes that benefit society as a whole, without anyone intending it.

Borrowing against the value of unpaid invoices while the seller keeps control of its sales ledger and collections, usually on a confidential basis. Unlike factoring, customers are not told their invoices have been financed.

The ICC's International Standard Banking Practice: detailed guidance on how documents are examined under UCP 600, bridging the rules and day-to-day banking practice.

International Standard Demand Guarantee Practice: the ICC's companion publication to URDG 758, recording 215 best practices across the lifecycle of a demand guarantee. Supplements but does not amend the rules.

A global standard for structured financial messaging. Its rich, data-led format is progressively replacing legacy message types across payments and securities.

International Standby Practices 1998: the ICC rules written specifically for standby letters of credit, distinct from the commercial-credit rules of UCP 600.

The buyer's bank that opens a letter of credit and carries the primary obligation to pay the beneficiary against compliant documents.

A Shari'ah-compliant contract financing goods to be manufactured or built, with payment and delivery staged over time. Suited to construction and capital projects.

The International Trade and Forfaiting Association: an industry body for trade finance, known for work on digital negotiable instruments through its DNI Initiative.

The distinction, drawn by economist Frank Knight, between risk that can be measured with probabilities and uncertainty that cannot. Much of Africa's cost of capital is uncertainty mistaken for risk.

Verifying the identity, ownership, and standing of a business counterparty, including its directors and beneficial owners, before and during a relationship.

The process of verifying a customer's identity and assessing their risk, required of regulated institutions at onboarding and on an ongoing basis.

A base blockchain, such as Ethereum, that provides the underlying security and final settlement that networks built on top of it anchor to.

A network built on top of a Layer 1 that handles transactions with greater speed and lower cost, while anchoring its state back to the base chain for security. Bridge runs as a permissioned Layer 2.

A 20-character global code that uniquely and permanently identifies a legal entity in financial transactions.

A central bank's role in providing emergency liquidity to solvent banks during a crisis. Codified by Walter Bagehot in 1873: lend freely, at a penalty rate, against good collateral.

A written statement of present intention, usually from a parent company, offering reassurance about an obligor's standing without creating a binding payment obligation. Whether it binds depends entirely on its wording.

A bank's promise to pay a seller a set amount once they present documents that meet agreed terms. It substitutes the bank's creditworthiness for the buyer's, so parties who cannot see each other can still trade.

A written undertaking to compensate a party against a specified loss, commonly used when original shipping documents are delayed or unavailable.

A non-risk-weighted capital measure under Basel III: a bank's Tier 1 capital divided by its total exposure. It acts as a backstop against models that understate risk by ignoring risk weights entirely.

A Basel III rule requiring a bank to hold enough high-quality liquid assets to survive a 30-day stress scenario, guarding against funding runs.

The risk that an institution cannot meet its obligations as they fall due without taking unacceptable losses. The fourth major risk type alongside credit, market, and operational risk, and the one the LCR and NSFR are built to contain.

An amount a bank sets aside for loans it expects will not be repaid, reducing reported profit. Under IFRS 9 it is based on expected credit losses, recognised before a default actually occurs.

The share of a credit exposure the lender actually loses after a default, net of recoveries. Collateral, guarantees, and recovery proceedings all reduce LGD.

Afreximbank's pan-African customer due-diligence repository, a shared source of KYC data on African entities. Distinct from Bridge's own Radar engine.

A demand for additional funds or collateral when a leveraged position loses value, to restore it to the required level. Failure to meet it triggers forced liquidation.

Valuing a position at its current market price rather than its historical cost, so gains and losses are recognised as prices move.

The risk of loss from movements in market prices, such as interest rates, exchange rates, or commodity prices. Commonly measured with Value at Risk.

The bill of lading a carrier issues to a freight forwarder for a whole consolidated consignment, as distinct from the house bills the forwarder issues to individual shippers.

A factoring arrangement where the factor pays the seller at a pre-determined date regardless of whether the buyer has paid, giving the seller a guaranteed payment timeline.

The core function of banking: funding long-term loans with short-term deposits. Socially useful because it channels savings into productive investment, but inherently fragile because depositors can withdraw at any time.

The doctrine that a nation's wealth lies in running trade surpluses and hoarding reserves, favouring exports and restricting imports. The protectionist orthodoxy that Smith and Ricardo overturned with the case for free trade.

A bank that finances and advises on trade and corporate deals. Historically the original trade financiers, who accepted and lent against bills of exchange, and the forerunner of the modern investment bank.

A way of hashing many records into a single root hash, so any one record can be verified against the whole set efficiently. A building block of blockchains.

The floor the OECD Arrangement sets on the premium an ECA must charge for cover, scaled by country risk category, to ensure premiums cover long-term costs and do not become hidden subsidies.

The UNCITRAL Model Law on Electronic Transferable Records (2017). It lets electronic records such as eBLs and e-promissory notes be legally equivalent to paper, provided a reliable method establishes control over a single authoritative version. The legal basis for digital originals.

A central bank's management of interest rates and the money supply to control inflation and support the economy. One leg of the impossible trinity.

Disguising the origins of criminal proceeds so they appear legitimate, conventionally described in three stages: placement, layering, and integration.

The market for short-term borrowing and lending, typically under a year, in instruments such as treasury bills, commercial paper, and repos. Where institutions manage day-to-day liquidity, as distinct from the capital market for longer-term funding.

The tendency to take greater risks when shielded from their consequences, as when a guarantee, bailout, or insurance removes the downside. A central problem in banking, insurance, and lending.

An asset-backed security whose underlying pool is mortgages. The asset class at the heart of the 2008 crisis.

The WTO principle that a trade advantage given to one member must be extended to all members, preventing discriminatory treatment between trading partners.

The SWIFT trade envelope message that lets corporates and their banks exchange documentary credit and guarantee instructions in a structured, bank-neutral format.

A legacy SWIFT message format identified by number, such as MT700 for issuing a documentary credit. Being succeeded by ISO 20022 (MX) messages.

A Shari'ah-compliant partnership in which one party provides capital and the other expertise, sharing profits by an agreed ratio while losses fall on the capital provider.

A control mechanism requiring several private keys to authorise a transaction rather than one. The basis of institutional custody and shared approval over digital assets and identities.

A single transport document covering carriage by at least two different modes, such as sea and road, under one contract.

Issuing more than one invoice for the same shipment to justify multiple payments or financings. A trade-based money-laundering technique, also called double invoicing.

A Shari'ah-compliant sale in which a financier buys goods and resells them to the client at cost plus a disclosed mark-up, payable later. The most widely used structure in Islamic trade finance, replacing interest with a transparent margin.

A Shari'ah-compliant joint venture in which partners contribute capital and share profits and losses in proportion to their stakes. The basis of Islamic equity finance.

A signed document promising or ordering payment of a fixed sum that can be transferred from one holder to another, such as a bill of exchange or promissory note.

In documentary credit practice, the purchase by a nominated bank of drafts or documents by advancing funds to the beneficiary before receiving reimbursement from the issuing bank.

The gap between the interest a bank earns on its assets and the interest it pays on its funding, as a share of those assets. A core measure of lending profitability.

A Basel III rule requiring a bank to fund its activities with sufficiently stable sources over a one-year horizon, reducing reliance on short-term wholesale funding.

A computer that takes part in a blockchain network, holding a copy of the ledger and validating or relaying transactions.

The bank a credit authorises to pay, accept, or negotiate documents. It may act on the issuing bank's behalf without being obliged to.

A loan in or near default, typically when payments are 90 or more days overdue. NPL ratios are a key gauge of a lender's asset quality.

Factoring where the factor assumes the risk of the buyer's financial failure and cannot recover from the seller if the buyer does not pay. The factor bears the credit risk.

Any trade restriction other than a tariff, such as quotas, licensing requirements, standards, or administrative procedures. Often harder to identify and negotiate away than tariffs.

Two views of the same correspondent account: a nostro is 'our account held with your bank', a vostro is 'your account held with our bank'. The plumbing of cross-border settlement.

Optical character recognition: technology that extracts text from images and scanned documents so software can read and process them.

The Organisation for Economic Co-operation and Development, a group of mostly high-income economies that sets common standards and hosts the Arrangement governing official export credits.

A Gentlemen's Agreement among OECD participants governing the financial terms of officially supported export credits, including minimum down-payments, maximum durations, minimum premiums, and minimum fixed rates.

The US Treasury's Office of Foreign Assets Control, which administers and enforces US economic sanctions. Its Specially Designated Nationals list is screened worldwide.

On-chain data is recorded on the ledger and independently verifiable; off-chain data is kept outside it. Bridge keeps commercial documents off-chain and their proofs on-chain.

A countertrade condition requiring the seller to invest in, source from, or transfer technology to the buyer's country. Common in large defence and aerospace contracts.

A contract under which a buyer commits to purchase a specified volume of output from a producer over a defined period, often used as collateral for project and commodity finance.

A formal model of the concepts in a domain and how they relate. Bridge's trade ontology encodes how goods, documents, rules, and parties connect.

Trade terms where goods are shipped and delivered before payment falls due. Simplest for the buyer, riskiest for the seller, who carries the non-payment risk.

The risk of loss from failed internal processes, people, or systems, or from external events, including fraud and error. One of the risk types banks hold capital against under Basel.

The value of the best alternative given up when a choice is made. The idea underlying comparative advantage: a country gains by specialising where its opportunity cost is lowest.

A derivative giving the holder the right, but not the obligation, to buy or sell an asset at a set price by a set date. The buyer pays a premium for that right.

A service that feeds trusted external data into a blockchain, so smart contracts can act on events that happen off the ledger.

A bill of lading made out 'to order', transferable by endorsement and delivery. As a document of title it lets ownership of goods in transit pass from holder to holder, the form used in documentary credits.

One of Bridge's four primitives, the document layer: creating trade documents as structured digital originals registered as unique records.

The inability of most developing economies to borrow internationally in their own currency, forcing them to take on exchange rate risk in every foreign loan. A term coined by economists Barry Eichengreen and Ricardo Hausmann: the structural disadvantage that makes emerging-market debt inherently more fragile.

A model where a lender makes loans intending to sell them to investors rather than hold them, freeing capital but weakening the incentive to underwrite carefully.

Stating a price above or below the true value of goods to move value across borders illicitly or to evade tax and controls. A core trade-based money-laundering technique.

A document detailing how a shipment is packed: contents, weights, dimensions, and marks per package. Used for handling, customs, and reconciliation.

The PAPSS African Currency Marketplace: a platform for trading and settling African currencies against each other, built on the PAPSS infrastructure and designed to deepen intra-African currency liquidity.

The Pan-African Payment and Settlement System: an Afreximbank-backed network that settles intra-African transactions in local currencies, without routing through correspondent banks or a third currency.

An informal group of creditor governments that coordinates the restructuring of sovereign debt owed by debtor countries. ECAs typically negotiate collectively through the Club when a borrower defaults.

A buyer-led technique, also called reverse factoring or supplier finance, in which a provider pays a buyer's approved invoices to its suppliers early, priced on the buyer's credit risk. It extends the buyer's DPO while shortening the supplier's DSO.

A guarantee securing the buyer's payment obligations under a contract, covering goods, services, or financial instruments. Often issued for the full purchase price.

The contractual order in which cash from a securitised pool is paid out, senior claims before junior, defining who bears losses first.

An international network and set of standards for exchanging electronic procurement and invoicing documents between trading parties.

A guarantee that compensates the beneficiary if a supplier fails to perform its contractual obligations, such as completing a project on time.

A blockchain where participation is restricted to vetted, identified parties, rather than open to anyone. Bridge runs a permissioned network.

US dollars earned by oil exporters from selling crude priced in dollars, then recycled into dollar assets. The arrangement that entrenched the dollar's reserve role after the gold standard ended.

An official certificate confirming plants or plant products meet import health requirements and are free from regulated pests and disease.

An individual entrusted with a prominent public function, who carries a higher bribery and corruption risk and so warrants enhanced due diligence.

Working capital advanced to a seller after goods have shipped, against the resulting invoice or accepted documents, to bridge the wait for buyer payment.

A loan to a commodity producer, repaid from the proceeds of future exports. The lender typically takes an assignment of the export receivables and the offtake contract as security.

Funding extended to a seller before goods ship, to pay for raw materials and production, often anchored to a confirmed order or credit.

The underlying crime, such as fraud, trafficking, or corruption, that generates the illicit proceeds money laundering then disguises. Anti-money-laundering law rests on the link between the two.

The convention that loans from multilateral development banks are repaid before any other creditor, making MDB lending the last to default and underpinning their high credit ratings.

A court order temporarily stopping a guarantor from paying a demand. Granted only where the applicant proves fraud or clear misuse of rights, not for ordinary contract disputes, and must be served before the payment period expires.

Funding advanced to a commodity producer against a commitment to deliver future output, repaid from the proceeds of that delivery. Common in oil, metals, and agriculture.

Lending by non-bank institutions, typically funds, directly to companies outside public markets. The fastest-growing segment of shadow banking, now exceeding $1.5 trillion globally.

Investment in companies that are not publicly traded, typically by funds that buy, restructure, and later sell them. The equity counterpart to private credit.

Insurance from a private underwriter covering the risk of a borrower's default on a commercial loan, including political and commercial risks. The private-market counterpart to ECA cover.

The likelihood that a borrower will fail to meet a contractual obligation within a given period. One of the three parameters, alongside LGD and EAD, that banks use to price credit risk.

A preliminary invoice issued before shipment, used by the buyer to arrange financing, open a credit, or begin customs procedures.

A signed, unconditional promise by one party to pay a fixed sum to another on demand or at a set date. A negotiable instrument that can be financed and transferred.

A consensus mechanism in which validators are chosen in proportion to the assets they lock up as a stake, securing the network without heavy energy use.

A consensus mechanism in which participants expend computing power to validate transactions and add blocks. Secure but energy-intensive; the original design behind Bitcoin.

The policy of shielding domestic industry from foreign competition through tariffs, quotas, and subsidies. The counterpoint to free trade, and the modern face of mercantilism.

The verifiable record of an item's origin and chain of custody, which a tamper-evident ledger can preserve and prove.

A cryptographic key pair: the private key signs or decrypts and is kept secret; the public key verifies or encrypts and can be shared. The basis of digital signatures.

A blockchain open to anyone to join, read, and transact, such as Ethereum, secured by economic incentives rather than vetted membership. The counterpart to a permissioned blockchain.

The framework of keys, certificates, and authorities that binds public keys to verified identities, underpinning trusted digital signatures and encrypted communication.

A buyer's formal offer to purchase goods at stated quantities, prices, and terms. Often the anchor document for working-capital finance.

Funding advanced against a confirmed purchase order to pay for producing or sourcing goods, before any invoice exists. A key way for smaller suppliers to fulfil orders they could not otherwise afford.

The theory that exchange rates should adjust so an identical basket of goods costs the same across countries. A long-run anchor for currency values, often far from short-run market rates.

An ECA's provision of a guarantee or insurance on a loan without itself lending, relying on commercial banks to fund. The dominant model for European and American ECAs, as distinct from direct lending.

A central bank policy of creating money to buy bonds and other assets, pushing down long-term interest rates when short-term rates are already near zero. A tool of last resort in deep downturns.

Current assets minus inventories, divided by current liabilities. A more conservative liquidity measure than the current ratio, since inventory is slower to convert to cash.

Bridge's compliance and risk engine: automated KYC and KYB, sanctions and PEP screening, monitoring, duplicate-financing detection, and regulatory reporting.

A tokenised identity issued to a verified entity on Bridge that travels across the network, so counterparties are not re-verified from scratch each time.

Representing traditional assets such as bonds, funds, or trade receivables as tokens on a blockchain, so they can be settled and traded digitally. Often abbreviated RWA.

The seller-led sale or financing of receivables, often on a whole-turnover basis, with the seller usually retaining collection. One of the ICC's named receivables-purchase techniques, alongside factoring and forfaiting.

Raising cash against unpaid invoices, by selling or borrowing against amounts customers owe.

Whether a financier can reclaim funds from the seller if the debtor does not pay. Non-recourse finance, such as most forfaiting, leaves that risk with the financier.

Factoring in which the factor can reclaim the advance from the seller if the buyer fails to pay. The seller keeps the credit risk, which makes it cheaper than non-recourse factoring.

A letter of credit containing a clause that authorises the advising or confirming bank to make advances to the beneficiary before shipment, against a simple receipt and undertaking.

A bank authorised by the issuing bank to settle claims from the bank that has paid, accepted, or negotiated documents under a credit.

Money sent home by workers abroad. A large and stable source of foreign-currency inflows for many developing economies, and one that can be raised against through future flow securitisation.

The two banks in a documentary collection: the remitting bank in the seller's country forwards the documents and instructions, and the collecting (or presenting) bank in the buyer's country releases them against payment or acceptance.

In trade finance, an arrangement where a company sells inventory to a bank at an agreed price and commits to repurchase it at a future date plus interest. Ownership transfers, reducing the company's inventory and improving its cash conversion cycle.

A currency held in significant quantities by central banks as part of their foreign exchange reserves, used for international transactions and as a store of value. The dollar has been the dominant reserve currency since 1944.

The share of deposits a bank must hold as reserves rather than lend out, set by the central bank. Raising it tightens credit; lowering it loosens it.

The paradox that resource-rich countries often grow more slowly and govern worse than resource-poor ones, through currency overvaluation, revenue volatility, and rent-seeking. Broader than Dutch disease, which is only the currency channel.

A guarantee allowing a supplier to receive the final payment that would otherwise be held back until the warranty period passes, by providing the buyer with equivalent security against defects.

Another name for payables finance: a buyer-led programme that begins with a strong anchor buyer, whose approved invoices a provider settles early to its suppliers, at rates set by the buyer's credit rather than the supplier's.

A credit whose amount is reinstated after each drawing, letting a buyer and seller run repeated shipments under a single facility.

An arrangement in which one bank takes on part of another's trade finance exposure, funded (the participant advances cash) or unfunded (the participant guarantees against loss). The main way banks distribute trade risk and free up capacity.

The FATF principle that institutions should direct anti-money-laundering effort in proportion to assessed risk, applying deeper scrutiny where risk is higher rather than treating all customers alike.

A bank's assets scaled by their riskiness, so a safe government bond counts for little and an unsecured loan for much. The denominator of the capital adequacy ratio.

A Layer 2 scaling method that executes transactions off the main chain and posts compressed proofs back to it. A zero-knowledge rollup uses validity proofs to inherit the base chain's security.

A UN convention intended to modernise and unify the law on international carriage of goods wholly or partly by sea, including electronic transport records.

Criteria determining which country a product comes from for the purpose of applying tariffs and trade preferences. Critical to how the AfCFTA and other free trade agreements distribute their benefits.

A Shari'ah-compliant forward purchase in which the buyer pays in full now for goods to be delivered later. Used to finance producers, especially in agriculture and commodities, who need cash before harvest.

The administration of a seller's receivables by a factor: issuing statements, ageing reports, reminders, and collections, removing the credit-control burden from the seller.

Restrictions imposed by governments or bodies such as the UN on dealings with specified countries, entities, or individuals. Breaches carry severe penalties.

Techniques used to dodge sanctions, such as ship-to-ship transfers, falsified documents, and front companies. Detecting them is a growing burden on trade finance, especially in oil and shipping.

Checking parties and transactions against official sanctions, watch, and embargo lists to avoid dealing with prohibited persons or jurisdictions.

A non-negotiable sea transport document. A receipt and contract of carriage but not a document of title, so goods go to the named consignee without surrender of an original.

Pooling financial assets such as loans or receivables and issuing tradeable securities backed by their cash flows, turning illiquid obligations into investable instruments.

The profit a state earns from issuing money: the gap between a currency's face value and the cost of producing it. For the issuer of a reserve currency, it extends to the cheap funding that the world's demand for that currency provides.

A model in which individuals and organisations hold and control their own identity credentials, presenting only what is needed, rather than relying on a central authority to vouch for them.

Financial intermediation performed outside the regulated banking system: money market funds, hedge funds, private credit, securitisation vehicles. It performs the same four functions as banking but without Basel's capital requirements or a lender of last resort.

A bank-issued undertaking that lets a buyer take delivery of goods before the original bill of lading arrives, indemnifying the carrier against claims. Released once the original document is presented.

A letter of credit payable immediately on presentation of compliant documents, as opposed to a usance or deferred-payment credit that pays at a later date.

One of Bridge's four primitives, the execution layer: binding actions to identities with cryptographic signatures and immutable, tamper-evident records.

An arrangement where a bank adds its payment undertaking to a letter of credit without the knowledge of the issuing bank, at the request and risk of the beneficiary.

Code deployed on a blockchain that executes automatically when its conditions are met, used to encode rules such as escrow release or transfer of title.

Evidence of where the money in a transaction comes from, examined in due diligence to rule out illicit origins. Distinct from source of wealth.

Evidence of how a person accumulated their overall wealth, as opposed to the source of funds in a single transaction. Examined in enhanced due diligence on higher-risk customers.

The convention that a borrower is rarely rated above its own government, capping corporate and bank ratings even when the borrower is stronger than the state.

A government's failure to repay its debt on time, by missing payments or forcing a restructuring. It can shut a country out of capital markets for years and is resolved through forums such as the Paris Club.

An international reserve asset created by the IMF, valued against a basket of major currencies and allocated to member countries to supplement their official reserves.

A separate, bankruptcy-remote legal entity created to hold a pool of assets and issue securities against them, isolating those assets from the originator's credit risk. Without it, securitisation cannot work.

The sale of a single chosen invoice for immediate cash, rather than committing the whole sales ledger. Also called selective or single-invoice finance, it suits occasional funding needs.

The price at which a commodity can be bought or sold for immediate delivery. The reference point against which futures, forwards, and financing are priced.

A digital token designed to hold a steady value by tracking a reference such as a fiat currency, used for on-chain payments and settlement.

A credit that pays out only if the applicant fails to perform an obligation. It works like a guarantee, drawn on only as a backstop. Governed by ISP98 or UCP 600.

A lighter form of collateral control in which an agent inspects and reports on goods held as security but, unlike a collateral management agreement, does not take physical control of them.

A bill of lading consigned to a named party and not transferable by endorsement. Goods are released to that consignee, so it is not a document of title in the negotiable sense.

A supervisory exercise modelling how a bank's capital would hold up under severe but plausible shocks, such as a deep recession or a market crash. A core tool of post-2008 oversight.

The standard by which banks examine documents under a credit: a presentation must conform to the credit's terms, and even minor discrepancies can justify refusal.

The package of economic reforms, including currency devaluation, subsidy removal, and market liberalisation, that the IMF and World Bank conditioned on lending to developing countries from the 1980s. Deeply contested in Africa and Latin America.

Tailored financing structures for commodity flows, typically involving security over the traded goods, assignment of receivables, and control of cash flows through escrow or collection accounts.

Breaking a large transaction into smaller ones to stay below reporting thresholds and avoid detection. Also called smurfing, it is a classic money-laundering technique.

A government payment or benefit that lowers a producer's or exporter's costs. Export subsidies are restricted under WTO rules because they distort competition.

A Shari'ah-compliant financial certificate, often called an Islamic bond, structured around ownership of real assets rather than interest-bearing debt.

An extended period, often a decade or more, of commodity prices running well above their long-run trend, typically driven by a structural surge in demand such as the industrialisation of a major economy.

An export credit where the supplier itself extends payment terms to the buyer, covered by the supplier's ECA. Simpler than a buyer's credit but riskier for the supplier, which remains exposed until final repayment.

The core market mechanism: the quantities sellers offer and buyers want at each price, whose balance sets the market price. Scarcity pushes prices up, abundance down.

The full network of organisations, people, and activities that moves a product from raw materials to the end customer. The physical flow that supply chain finance funds and digital trade aims to make visible.

A set of techniques, usually buyer-led, that let suppliers be paid early against approved invoices while the buyer pays on its normal terms.

An accessory guarantee where the surety's obligation is linked to the underlying transaction. Unlike an independent demand guarantee, arguments must be settled before payment is made.

A confidential report a regulated firm files with its financial intelligence unit when it suspects funds are linked to crime. Also called a suspicious transaction report, it is the core output of anti-money-laundering monitoring.

A report a regulated institution files with its financial intelligence unit when it suspects funds are connected to crime. Also called a suspicious activity report.

A derivative in which two parties exchange cash flows, such as fixed for floating interest or one commodity price reference for another, to manage exposure to price or rate movements.

The cooperative network most banks use to exchange standardised financial messages worldwide. It carries instructions; settlement happens on other rails.

SWIFT's global payments innovation service, which gives cross-border payments end-to-end tracking and faster, more transparent settlement.

A second set of bills issued to replace the originals, often to change the named shipper, port details, or cargo description. Legitimate in some trades but a recognised vehicle for fraud and concealment.

A CDO that gains its exposure to credit risk through credit default swaps rather than by actually owning the underlying loans or bonds. The technology that allowed risk to be replicated without limit and amplified the 2008 crisis.

A tax levied on imported goods at the border, raising their price in the domestic market. The oldest and most visible instrument of trade policy.

A confirmation that the original bills of lading have been surrendered at origin, allowing goods to be released at destination without presenting paper originals.

The time allowed for payment under a draft or credit, such as 'at sight' or '90 days after shipment'. It determines when the beneficiary is paid.

Bridge's supply chain orchestration product: a structured model of goods, shipments, and parties that turns verified delivery into settlement.

The ratio of a country's export prices to its import prices. When it falls, a country must export more to buy the same imports, a chronic pressure on commodity exporters.

The Trade Finance Distribution Initiative, an industry effort to standardise and digitise the distribution of trade-finance assets to investors.

Bridge's embedded insurance product: a digital broker for freight and trade credit cover, priced on verified data.

A single bill of lading covering carriage by more than one carrier or over successive legs to a final destination, with the issuing carrier arranging the onward stages.

Concessional finance linked to the purchase of goods or services from the donor country, combined with an export credit. The OECD Arrangement limits it to poorer countries and requires a grant element of at least 35%.

A bank's core capital, chiefly common equity and retained earnings, that absorbs losses while the bank keeps operating. The highest-quality layer of the capital stack.

A bank's supplementary capital, such as subordinated debt and certain reserves, that absorbs losses once the bank fails rather than while it operates. Ranks below Tier 1 in quality.

The offence of warning a customer that they are under suspicion or that a suspicious transaction report has been filed, which could prejudice an investigation.

Representing an asset, right, or document as a unique digital record on a ledger, so it can be owned, transferred, and verified.

A financing arrangement for commodity processing, where the financier funds raw material delivered to a processor and takes security over the output, bridging the conversion from input to finished product.

The difference between the value of a country's exports and imports. A surplus means it sells more than it buys; a deficit, the reverse.

The shift to cheaper supply from a partner country when a bloc removes tariffs between members, raising welfare. The beneficial effect of a customs union.

Credit one business extends to another by allowing payment after delivery. The most common form of short-term finance in commerce.

The shift from a cheaper outside supplier to a less efficient partner, simply because the partner's goods are now tariff-free within a bloc. The costly side effect of a customs union.

A programme run by multilateral development banks to guarantee bank commitments under documentary credits and technical guarantees in emerging markets, improving access to trade finance where it is needed most.

The financing and risk-mitigation instruments that make trade possible, from letters of credit and guarantees to receivables and supply chain finance.

The shortfall between the trade finance businesses request and what banks actually provide. Estimated in the hundreds of billions of dollars, it falls hardest on SMEs and emerging markets.

A short-term bank advance financing a specific import or export, repaid from the proceeds of the underlying trade. The simplest and most common trade finance facility.

Disguising the proceeds of crime by manipulating trade transactions, through over- or under-invoicing, mis-describing goods, or phantom shipments. A primary financial-crime risk in trade finance.

One of several risk-and-return layers carved from a securitised pool. Senior tranches are paid first and rated highest; junior tranches absorb losses first in return for higher yield.

The ongoing review of transactions against expected behaviour to flag anomalies, threshold breaches, and patterns that may indicate financial crime.

A letter of credit that the first beneficiary may transfer, in whole or in part, to one or more second beneficiaries, used by intermediaries and traders.

The FATF requirement (Recommendation 16) that originator and beneficiary information travels with a payment so funds can be traced. Increasingly applied to crypto and stablecoin transfers.

A short-term government debt instrument, sold at a discount and redeemed at face value, usually maturing within a year. Treated as the risk-free benchmark against which other yields are measured.

The bind facing any country whose currency is the world's reserve: it must run deficits to supply the world with that currency, yet those very deficits erode confidence in it. Named after economist Robert Triffin.

A genuine legal transfer of assets to an SPV, as opposed to secured lending, so the assets are beyond the reach of the originator's creditors. The basis of valid securitisation.

An arrangement that lets a buyer take possession of goods a bank has financed while the bank keeps title to them until it is repaid.

An international factoring structure with an export factor in the seller's country and an import factor in the buyer's country, the latter assuming the buyer's credit risk and handling collection. FCI runs the largest such network.

The article of the US Uniform Commercial Code that governs letters of credit under US law, the domestic counterpart to the ICC's UCP 600 in international practice.

The ICC's Uniform Customs and Practice for Documentary Credits (2007 revision): the rulebook almost all letters of credit are issued under, governing how documents are examined and credits honoured.

The Uniform Electronic Transactions Act: a US state-level law giving legal effect to electronic records and signatures, complementing the federal ESIGN Act.

The natural person who ultimately owns or controls a company. Identifying the UBO stops wrongdoing being hidden behind layers of corporate ownership.

A 1995 UNCITRAL convention providing a legislative framework for independent guarantees and standby letters of credit, adopted by a small number of states. Aimed at harmonising national law rather than offering contractual rules.

The UN Centre for Trade Facilitation and Electronic Business: the body behind widely used semantic and data standards for trade documents.

The UN Commission on International Trade Law, which drafts the model laws and conventions, including MLETR, that harmonise cross-border commerce.

The UN Conference on Trade and Development, the UN body that supports developing countries in trade, investment, and finance, and a long-standing voice for reform of the global trading system.

In capital markets, a bank's commitment to buy an issue of securities and resell it to investors, bearing the risk it does not sell. More broadly, the assessment and pricing of risk by a lender or insurer.

The UNIDROIT Convention on International Factoring, which defines factoring as an agreement providing at least two of three services: credit protection, advance, and collection, on a continuing basis.

The ICC's Uniform Rules for Bank Payment Obligations (2013), governing the BPO as a data-matched payment undertaking between banks.

The ICC's Uniform Rules for Collections: the standard governing documentary collections, where banks handle documents against payment or acceptance.

The ICC's Uniform Rules for Demand Guarantees (2010): the standard framework for independent demand guarantees used in trade and projects.

The ICC's Uniform Rules for Digital Trade Transactions (2021): a framework for fully digital, data-driven trade obligations between parties, designed for a paperless environment rather than adapting paper-era rules.

The ICC's Uniform Rules for Forfaiting (2013), the standard framework governing the without-recourse purchase of trade receivables in forfaiting transactions.

The ICC's Uniform Rules for Bank-to-Bank Reimbursements, governing how a reimbursing bank settles claims under a documentary credit.

A credit or draft payable a set period after sight or shipment rather than immediately. Also called a term or time credit, as opposed to a sight credit.

A cryptographic proof that a batch of transactions was executed correctly, letting a Layer 2 settle on its Layer 1 without the base chain re-running the work. The mechanism behind a zero-knowledge rollup.

A statistical estimate of the maximum loss a portfolio is likely to suffer over a set period at a given confidence level. A standard, and much-criticised, risk measure.

Bridge's intelligent document management product: structured, verifiable, governed documents, built from templates, classified by AI, and signed.

Financing a supplier extends to its buyer, or arranges on the buyer's behalf, to help close a sale the buyer could not otherwise fund.

A tamper-evident digital claim, cryptographically signed by its issuer, that a holder can present and a third party can verify without contacting the issuer. A building block of portable digital identity.

One of Bridge's four primitives, the authentication layer: independently confirming a document's integrity, ownership, and chain of custody without relying on the issuer.

Software that holds the cryptographic keys used to sign transactions and prove control of assets or identities on a blockchain.

A document issued by a warehouse operator confirming goods held in storage. It can serve as collateral, letting stored commodities back financing.

Lending against goods in storage, using the warehouse receipt as collateral and proof of title. It lets producers and traders raise cash on stock they have not yet sold.

A guarantee securing a supplier's warranty obligations, covering the buyer's claims for defects in goods or services after delivery. Typically around 5% of the contract value.

A list of individuals or entities flagged for sanctions, law-enforcement, or risk reasons, screened against during onboarding and monitoring.

The World Customs Organization, which maintains the Harmonized System behind HS codes and sets customs standards used worldwide.

A document certifying the weight of a shipment, issued by an independent weigher or inspector. Common in bulk commodity trade, where price often turns on weight at loading or discharge.

An association of global banks that issues principles and guidance on financial-crime risk, including widely used trade finance principles for managing money-laundering risk.

Current assets minus current liabilities: the measure of a company's short-term liquidity, efficiency, and financial health. The fuel that keeps the trade cycle running.

A multilateral development institution founded at Bretton Woods that lends to developing countries for projects and reforms. Its private-sector arm is the IFC.

The World Trade Organization, the body that administers the rules governing trade between nations.

The return an investor earns on a security, expressed as an annual percentage. For a bond it moves inversely to price.

A plot of the yields on bonds of equal quality across different maturities. Its shape signals market expectations for growth and interest rates, and an inverted curve is a classic recession warning.

A cryptographic method to prove a statement is true without revealing the underlying information, for example proving a document is valid without disclosing its contents.