Trade Finance Facilitation Program (TFFP) at a Glance
What is Trade Finance?
- Finance provided by banks as a means of payment (or guarantee of payment) between importers and exporters.
What is the Trade Finance Facilitation Program (TFFP)?
- A mechanism for providing mitigation against commercial and political risks associated with international trade in ADB's developing member countries (DMCs)
- Was designed to address crisis – working with private sector to maintain trade credit to DMC's – supporting imports of critical goods (food, medicine, fuel, inputs for export product) in times of crisis
- Provides precise instrument for intervention in crisis – injects support quickly and directly (no sovereign guarantee) to private sector and to trade
- In non-crisis, TFFP provides additional/leveraged trade finance capacity, supporting growth in DMC's share of global trade
What are the benefits from the Program?
To issuing banks, the TFFP will:
- Effectively increase and maintain trade credit lines available
- Help develop correspondent relationships with confirming banks
- Avoid the need to place cash collateral
- Provide more support to importing and exporting clients
To confirming banks, the TFFP will:
- Help manage risk exposure and leverage available limits to emerging Asian markets
- Provide a AAA counter-party risk that is favorably treated under Basel II capital allocations
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