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.

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.