Introduction For a multinational company to operate in the business world today, cross-border transactions are a vital component to enable them to expand into new markets and optimize a streamlined and efficient supply chain. As small and medium-sized businesses increase their global trade, this has led to an increase in corporate clients seeking trade financing. The consequences of the 2008 financial crisis led to the introduction of Basel III. This is an attempt to strengthen the banking sector's ability to cope with financial and economic stress. Its aim is to improve risk management and transparency between banks. How does global trading work in a banking system? The importance of trade finance in the world can be seen from the level of imports which grew by 11% in 2011 to reach $18 trillion. Trade financing facilitates the movement of goods with the use of a letter of credit from a bank. A letter of credit If companies are unable to access this facility, the exporter would be reluctant to sell their goods to unknown parties and would hinder international trade. A letter of credit allows two unknown parties to complete a transaction while eliminating the risk of non-payment. It allows the importer to escape prepayment to the exporter and gives the exporter certainty that he will be paid for his goods. It minimizes credit risk, as it is a guarantee that the payment will be satisfied by a bank. From a banking perspective, a letter of credit is a contingent liability until it is presented for payment. Upon presentation the bank will facilitate payment from the importer's accounts. In case a shortfall occurs, the bank will pay the exporter and recover the funds from the importer. The ICC report shows that conversion...... middle of paper ... comes at the expense of global trade. As world economies seek to continue growing after the financial crash, the implementation of Basel III impacts their recovery. There are many strong arguments in favor of the Basel II alternation with respect to trade financing, which is low risk, classified as risky as a credit default swap and which gives banks no incentive to trade in trade financing as a capital requirement for a low risk product (letter of credit). it is the same as a high risk product (credit default swap). With the European Commission currently examining the implications of Basel III, we may see a change to Basel III in the future. As it stands, the implementation of Basel III will have a materially negative impact on the corporate treasury function within a multinational as access to trade finance will be prohibitively expensive or extremely difficult to acquire.