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Trade groups and big trade finance providers such as HSBC and Standard Chartered have warned for months that the Basel III reform package could stifle international commerce by sharply increasing the cost of letters of credit, import financing and other trade loans.
The Basel Committee on Banking Supervision, after pressure from the World Trade Organisation, agreed to make two changes to the way banks measure the riskiness of loans to importers and exporters. Both have the effect of reducing capital charges for trade finance, particularly to low income countries.
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