Politically motivated limitations on payments of foreign currency may expose an FI to

Question

Quizplus · Accepted Answer

Politically motivated limitations on payments of foreign currency are related to sovereign country risk, which refers to the risk that a foreign government will enact policies that adversely affect the operations or investments of foreign entities in that country. This can include restrictions on payment of foreign currency, nationalization, terrorism, war or other factors beyond the control of the FI. Interest rate risk relates to the risk of changes in interest rates which may cause fluctuations in the value of financial instruments. Credit risk refers to the potential loss from default by a borrower or counterparty, while foreign exchange risk is the risk of loss from fluctuations in exchange rates.

Politically Motivated Limitations on Payments of Foreign Currency May Expose