DIGITAL CURRENCIES, BLOCKCHAIN, AND THE FUTURE OF GLOBAL TRADE

Abstract

This paper explores the transformative potential of digital currencies and blockchain technology in reshaping the architecture of global trade. Traditional trade finance systems are characterized by high transaction costs, delayed settlements, and fraud risks, contributing to a persistent US$2.5 trillion trade finance gap (ADB, 2023). Using secondary data from the Bank for International Settlements, IMF, WTO, and other global institutions, this study compares traditional mechanisms with blockchain-enabled solutions, including Central Bank Digital Currencies (CBDCs), stablecoins, tokenized assets, and digital trade documentation. The findings demonstrate that blockchain can reduce transaction costs by up to 67%, cut settlement delays by 93%, and lower expected fraud losses by 67%. For firms conducting frequent high-value trades, these efficiencies translate into multi-million-dollar savings annually. However, challenges such as regulatory fragmentation, cybersecurity threats, and interoperability issues remain. The study concludes that the future of trade will likely adopt a hybrid model, combining traditional and blockchain-based systems.