Basel III may kill traditional trade finance?

The new Basel III rules for banking regulation and capital requirements look likely to greatly increase the capital reserves for off-balance sheet financial structures. Inadvertantly, this may affect trade finance instruments, such as letters of credit. A new report from the World Bank suggests that the current commercial model for trade finance may no longer hold water.

http://go.worldbank.org/ZBPISIJC40

Trade finance is already expensive and complicated, so where does this leave trading companies?

It seems to make an even stronger case for alternative funding methods.