Correspondent Banking Relationships and Trade

Banks often use intermediary banks through CBRs to enable cross-border payments. These relationships are, therefore, critical for international trade transactions that rely on those payments. In recent years, CBRs have declined in many developing economies, and the de-risking strategy of some banks contributes to this trend. This decline in CBRs creates a challenge for LDCs, LLDCs, and SIDS to conduct trade. This brief examines the cause of declining CBRs, and presents a preliminary assessment of how it can affect trade, and proposes possible pathways of action.