Who bears the payment risk in a letter of credit?

Question

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The issuing bank bears the payment risk in a letter of credit. This means that if the exporter fulfills all of the terms and conditions outlined in the letter of credit, the bank will guarantee payment to the exporter. However, if the importer defaults on payment or breaches the terms of the letter of credit, the issuing bank will be responsible for covering the payment. The exporter and importer do not bear the payment risk, as long as they fulfill their respective obligations according to the terms of the letter of credit.

Who Bears the Payment Risk in a Letter of Credit