Revolutionizing trade finance: leveraging the power of blockchain and AI in electronic letters of credit

Abstract

Abstract This article examines the innovative combination of blockchain and artificial intelligence (AI) technologies in the field of electronic letters of credit and international trade finance. It explores how the combined effect of this convergence may greatly improve the security, effectiveness, and clarity of trade finance procedures. The article presents a suggested framework for combining various technologies, focusing on important design considerations including security, trust, interoperability, and adherence to international trade norms. The technological design blends blockchain’s decentralized ledger with AI’s analytical capabilities, highlighting the need of smart contracts, data management, and application programming interfaces for smooth interoperability. The implementation plan and stages are meticulously detailed, emphasizing the systematic approach necessary for effective integration. The article also discusses the problems and dangers related to this technology integration, such as technical obstacles, regulatory compliance, security threats, stakeholder acceptance, and cost factors. The conclusion outlines the impact of blockchain and AI on trade finance, discusses their larger implications for international commerce, and advocates for the adoption of these advanced technologies by collective action. This article seeks to provide significant insights to financial institutions, policy-makers, technologists, and stakeholders in the trade finance sector, promoting the modernization of trade finance via new technology.