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In order to improve the country risk management system of banking financial institutions and promote the steady and healthy development of the banking industry, the CBRC has revised the Guidelines on Country Risk Management of Banking Financial Institutions (hereinafter referred to as the Guidelines) to form the Measures for Country Risk Management of Banking Financial Institutions (Draft for Comments) (hereinafter referred to as the Measures). It is now officially open to the public for comments.
The Measures continue the framework of the Guidelines and remain unchanged for five chapters, with a total of 43 articles. The key revisions are as follows: First, the Guidance is adjusted to the Measures, and the name is correspondingly changed to the National Risk Management Measures for Banking Financial Institutions. Second, the original Guidelines did not specify a unified standard for the measurement of country risk exposure, and this revision is based on the principle of comprehensive risk coverage. Third, in view of the problem that the Guidance does not link up with the new accounting standards, which leads to repeated provision, this revision includes country risk provision under the owner's equity as a part of general provision, and should meet the regulatory requirements of the Ministry of Finance on general provision. Fourth, we improved the scope and proportion of the provision for country risk, and revised and improved the division of responsibilities of banking financial institutions for country risk management, the restrictive requirements related to country risk transfer, and the identification of the country risk level of international organizations or institutions. Fifthly, a six-month transition period was given to the new provision requirements for country risk preparation. At the same time, before the promulgation and implementation of the Measures, no accounting adjustment will be made to the stock country risk reserves.
The revision of the Guidelines is an important measure to improve the country risk management system of China's banking financial institutions, which reflects the concept of keeping pace with the times, helps to remedy the system weaknesses, prevent financial risks, and plays a positive role in improving the competitiveness of China's banking financial institutions in the process of internationalization and strengthening risk management. In the next step, the CBRC will further revise and improve the Measures according to the feedback from all walks of life, and issue and implement them in due time.
Heads of relevant departments of the China Banking and Insurance Regulatory Commission answer questions from reporters on the Measures for Country Risk Management of Banking Financial Institutions (Draft for Comments)
In order to improve the country risk management system of banking financial institutions and promote the steady and healthy development of the banking industry, the CBRC has revised the Guidelines on Country Risk Management of Banking Financial Institutions (hereinafter referred to as the Guidelines) to form the Measures for Country Risk Management of Banking Financial Institutions (Draft for Comments) (hereinafter referred to as the Measures). It is now officially open to the public for comments. The head of the relevant department of the China Banking and Insurance Regulatory Commission answered the reporter's questions on relevant issues.
1、 What are the background and main contents of the revision of the Guidelines?
The Guidelines issued and implemented in 2010 made up for the weakness of the country risk management system. Since its implementation 12 years ago, the Guidelines have played a positive role in guiding banking financial institutions to build a country risk management system and improve their country risk management capabilities. At the same time, however, the Guidelines need to be further improved in terms of country risk exposure measurement criteria, country risk responsibility division, country risk transfer standards, country risk level identification of international organizations or institutions, and country risk reserve provision. In combination with the above, the CBRC has systematically studied, revised and improved the Guidelines. Considering that the Guidelines are in line with the definition of normative documents in the Measures for the Management of Regulatory Documents of the CBRC, this revision has changed the document style from the Guidelines to the Measures, the name of which is correspondingly changed to the Measures for the Management of Country Risks of Banking Financial Institutions, and added provisions on administrative penalties.
2、 What major revisions have been made to country risk preparedness in the Measures?
With the implementation of International Financial Reporting Standard No. 9 (IFRS 9) and the implementation of China's accounting standards for recognition and measurement of financial instruments (CAS22), the provision for impairment of assets in the banking industry has been transferred from the incurred loss method to the expected loss method The requirement for banks to accrue country risk reserves in addition to impairment reserves leads to inconsistency with the new accounting standards, which leads to the problem of repeated accruals. In response to this problem, this revision includes country risk reserves under the owner's equity as a part of general reserves, which should meet the regulatory requirements of the Ministry of Finance on general reserves. That is, if the banking financial institution is generally well prepared and meets the relevant requirements of the Ministry of Finance, it can be deemed that it is sufficient to cover the country risk reserve, and the institution does not need to repeatedly withdraw the country risk reserve; If the general reserve of the banking financial institutions is insufficient and fails to meet the relevant bottom line requirements of the Ministry of Finance, the institutions need to withdraw country risk reserve from undistributed profits and include it in the general reserve.
In this revision, the scope of provision for country risk reserves is limited to medium, high and high country risk exposures, and the proportion of provision is set at 5%, 15% and 40%. This revision clarifies that the provision scope for country risk reserves includes undrawn commitments and financial guarantee contracts, which is consistent with the relevant provisions of the Ministry of Finance, and requires that the provision be made after conversion according to the credit conversion coefficient of off balance sheet items specified in the Capital Management Measures of Commercial Banks (for trial implementation). At the same time, the Measures specify that the regulatory authority can adjust the above proportion according to the change of country risk, bank operation and management, etc.
3、 How to set the transition period of the Measures?
Considering that the Bank will carry out specific work such as revising the internal management system after the implementation of the Measures, Article 43 of the Measures makes it clear that a six-month transition period will be given to the implementation of the new provision requirements for the bank's country risk preparation, that is, the new country risk exposure from the date of promulgation and implementation of the Measures needs to meet the regulatory requirements within six months. In order to ensure the smooth transition of banking financial institutions to the maximum extent, the Ministry of Finance agreed that the stock country risk reserves that had been withdrawn before the promulgation and implementation of the Measures would not be subject to accounting adjustment and would continue to be used as a component of asset impairment reserves to resist asset risks.
Measures for Country Risk Management of Banking Financial Institutions
(Draft for Comments)
general provisions
Article 1 These Measures are formulated in accordance with the Banking Supervision Law of the People's Republic of China, the Commercial Bank Law of the People's Republic of China and other relevant laws and administrative regulations in order to strengthen the country risk management of banking financial institutions.
Article 2 The banking financial institutions referred to in these Measures refer to the banking financial institutions, policy banks and the National Development Bank that absorb public deposits, such as commercial banks, postal savings banks, rural credit cooperatives, and other banking financial institutions established in accordance with the law within the territory of the People's Republic of China.
Article 3 The term "country risk" as mentioned in these Measures refers to the risk that the debtor of a country or region is unable or refuses to pay the debts of the banking financial institutions, or causes losses to the commercial presence of the banking financial institutions in the country or region, or causes other losses to the banking financial institutions due to political, economic and social changes and events in that country or region.
Country risk may be caused by the deterioration of the economic situation of a country or region, political and social unrest, nationalization or expropriation of assets, refusal of the government to pay foreign debts, foreign exchange control or currency devaluation.
The main types of country risk include transfer risk, sovereign risk, contagion risk, currency risk, macroeconomic risk, political risk and indirect country risk (see Annex 1 for details).
Article 4 The countries or regions mentioned in these Measures refer to different jurisdictions or economic entities.
Article 5 The term "country risk exposure" as mentioned in these Measures refers to all on balance sheet and off balance sheet risk exposures of banking financial institutions arising from overseas businesses, including overseas loans, overseas portfolio investment and asset management product investment, interbank deposits, deposits with overseas central banks, interbank placements, redemptory purchase of assets, overseas financial derivatives, investments in non consolidated overseas institutions On balance sheet businesses such as overseas bill financing, overseas accounts receivable and other overseas claims, and off balance sheet businesses such as guarantees and commitments.
Major country risk exposure refers to the country risk exposure to a single country or region that exceeds 25% of the net capital of the banking financial institution group.
Article 6 The term "risk transfer" as mentioned in these Measures refers to the act of an overseas debtor to transfer part or all of the country risk of the overseas creditor's rights held by a banking financial institution by means of risk transfer. Specifically, it includes legally effective guarantees, insurance, credit derivatives, and qualified mortgages and pledges provided by the third party.
The country risk rating of the country or region to which the country risk transferee belongs must be superior to the country risk rating of the overseas debtor of the country risk transferor.
Article 7 The term "country risk reserves" as mentioned in these Measures refers to the reserves made by banking financial institutions under the owner's equity for the purpose of absorbing unexpected losses caused by country risks.
Article 8 Banking financial institutions shall effectively identify, measure, monitor and control country risk, and take full account of the impact of country risk when making provision for asset impairment in accordance with the relevant provisions of enterprise financial accounting.
Article 9 The China Banking and Insurance Regulatory Commission (hereinafter referred to as the CBRC) and its local offices shall, in accordance with the law, supervise and inspect the country risk management of banking financial institutions, obtain the country risk information of banking financial institutions in a timely manner, and evaluate the effectiveness of the country risk management of banking financial institutions.
Chapter II Country Risk Management
Article 10 Banking financial institutions shall, in accordance with the requirements of these Measures, incorporate country risk management into the comprehensive risk management system, and establish a country risk management system that is compatible with their strategic objectives, the scale and complexity of country risk exposure. The country risk management system includes the following basic elements:
（1） Effective monitoring by the Board of Directors and senior management;
（2） Sound country risk management policies and procedures;
（3） Perfect national risk identification, measurement, monitoring and control process;
（4） Perfect internal control and audit.
Article 11 The board of directors of a banking financial institution shall bear the ultimate responsibility for monitoring the effectiveness of country risk management. Main responsibilities include:
（1） Review and approve country risk management strategies, policies and procedures;
（2） Ensure that senior management takes necessary measures to identify, measure, monitor and control country risk;
（3） Monitor and evaluate the effectiveness of country risk management and the performance of senior management on country risk management;
（4） Determine the supervision responsibilities of the internal audit department for country risk management.
Article 12 The senior management of banking financial institutions shall be responsible for implementing the country risk management policies approved by the Board of Directors. Main responsibilities include:
（1） Formulate, review and supervise the implementation of national risk management policies, procedures and operating procedures;
（2） Regularly review and approve country risk management limits;
（3） Regularly review the country risk report, and timely understand the country risk level and management status; Review country risk stress test reports and emergency plans;
（4） Clearly define the responsibility of each department for country risk management and the path, frequency and content of country risk report, urge each department to earnestly perform its responsibility for country risk management, and ensure the normal operation of the country risk management system;
（5） Ensure that appropriate organizational structure, management information system and sufficient resources are available to effectively identify, measure, monitor and control the country risk undertaken by various businesses.
Article 13 A banking financial institution shall designate an appropriate department to undertake the responsibility of country risk management and formulate country risk management policies applicable to the institution.
The country risk management policy shall be compatible with the nature, scale and complexity of the cross-border business of the institution. The main contents include:
（1） Cross border business strategy and the type of country risk mainly undertaken;
（2） Organizational structure, authority and responsibility of country risk management;
（3） Country risk identification, measurement, monitoring and control procedures;
（4） Country risk reporting system;
（5） Country risk management information system;
（6） Internal control and audit of country risk;
（7） Country risk preparation policy and accrual method;
（8） Country risk stress test and emergency plan.
Article 14 In addition to paying attention to the country risk existing in credit granting, investment, off balance sheet business and other businesses, banking financial institutions should also pay attention to the potential country risk faced in the business activities such as establishing overseas institutions, correspondent bank transactions, and outsourcing services provided by overseas service providers.
Banking financial institutions should ensure that at the level of single legal person and group consolidation, they identify and monitor potential country risks and understand the types of country risks they undertake.
Article 15 Banking financial institutions shall ensure that international credit and domestic credit apply the same principles, including: strictly following the principle of "knowing your customers", conducting full due diligence on overseas debtors, and ensuring that debtors have sufficient assets or sources of income to perform their debts; Carefully verify the identity and final ownership of the debtor to avoid excessive risk concentration; Check the actual use of funds with due diligence to prevent loan misappropriation; Carefully evaluate the legality of overseas mortgages and pledges and their legal effects that can be enforced; Establish a perfect post grant management system.
Article 16 When conducting due diligence on clients or counterparties, banking financial institutions should strictly abide by laws and regulations on anti money laundering and anti-terrorism financing, be highly vigilant against businesses and transactions involving sensitive countries or regions, establish and improve corresponding management information systems, and timely input and update information about high-risk and suspicious clients, Prevent individual organizations or individuals from using this institution to engage in supporting terrorism, money laundering or other illegal activities.
Article 17 A banking financial institution shall select an appropriate measurement method according to its country risk type, exposure scale and complexity. The measurement method should at least meet the following requirements: it can cover all country risk exposures and different types of risks on and off the balance sheet; Be able to measure risk by country at the consolidated level of single legal person and group; The country risk can be measured separately according to the situation of risk transfer and no risk transfer.
Article 18 A banking financial institution shall reasonably use its internal and external resources to carry out country risk assessment and rating, and make independent judgments on this basis. Banking financial institutions with low country risk exposure can mainly use external resources to carry out country risk assessment and rating, but should ultimately make independent judgments.
Article 19 Banking financial institutions shall establish a country risk assessment system appropriate to the scale and complexity of country risk exposure, and conduct risk assessment on a regular basis and one by one for countries or regions that have conducted and plan to conduct business.
When assessing country risk, banking financial institutions should fully consider the qualitative and quantitative factors of political diplomacy, economic finance, institutional operation and social security environment of a country or region (see Annex 2 for details). Institutions conducting business or having a commercial presence in the International Financial Center should also fully consider the inherent risk factors of the International Financial Center. In case of instability or possible crisis in a particular country or region, the risk assessment of that country or region should be updated in a timely manner.
Banking financial institutions should fully consider the results of country risk assessment when formulating business development strategies, approving credit, assessing the debtor's repayment ability, conducting country risk rating and setting country risk limits.
Article 20 A banking financial institution shall establish a formal internal rating system for country risk and regularly carry out country risk rating to reflect the results of country risk assessment. Country risk should be classified into at least five levels: low, low, medium, high and high (see Annex 3 for details). Among them, international organizations or institutions with a risk weight of 0% can be identified as low risk; Other international organizations or institutions with risk weights shall prudently determine the risk level according to the country or region where they are located, intergovernmental or non-governmental nature, conclusion form and main participants, contents specified in the concluded treaties or legal documents, etc. Institutions with large country risk exposure can consider establishing more complex rating systems. In the case of extreme risk events, the CBRC can uniformly specify the risk level of specific countries or regions.
Banking financial institutions should fully consider the results of country risk rating when classifying asset risks, setting country risk limits and determining the level of country risk reserves.
Article 21 Banking financial institutions shall implement limit management on country risk, and reasonably set country risk limits covering off balance sheet and off balance sheet items according to countries on the basis of comprehensive consideration of cross-border business development strategies, country risk ratings, their own risk preferences and other factors. Banking financial institutions with significant country risk exposure should consider setting classified limits under the total limit by business type, customer or counterparty type, country risk type and duration.
Country risk limits should be approved by senior management and communicated to relevant departments and personnel. Banking financial institutions should review and approve country risk limits at least annually, and increase the frequency of review and approval in case of significant changes in risk conditions in specific countries or regions.
Banking financial institutions should establish national risk limit monitoring, overrun reporting and approval procedures, monitor compliance with national risk limits at least monthly, and institutions holding more trading assets should increase monitoring frequency. The situation of exceeding the limit shall be reported to the management at the corresponding level in time to obtain approval or take corrective measures. The management information system of banking financial institutions shall be able to effectively monitor the compliance with limits.
Article 22 A banking financial institution shall establish a monitoring mechanism appropriate to the scale of country risk exposure, monitor risks by country at the consolidated level of a single legal person and a group, and the monitoring information shall be properly kept in the country risk assessment file. When the situation in a particular country or region deteriorates, the monitoring frequency should be increased. When necessary, banking financial institutions should also monitor the risk status and trends of specific international financial centers, a region or a group of countries or regions with similar characteristics.
Banking financial institutions can make full use of internal and external resources to implement monitoring, including requiring their overseas institutions to provide country risk status reports, visiting relevant countries or regions regularly, and obtaining relevant information from rating agencies or other external institutions. Banking financial institutions with low country risk exposure can mainly use external resources to carry out country risk monitoring.
Article 23 Banking financial institutions shall establish country risk stress test methods and procedures that are appropriate to the scale and complexity of country risk exposure, regularly test the potential impact of different hypothetical scenarios on country risk conditions, identify early potential risks, and assess the consistency of business development strategies and strategic objectives.
Banking financial institutions should regularly report the test results to the senior management, formulate national risk management contingency plans based on the test results, timely deal with the risk exposure to countries or regions in distress, define the risk mitigation measures that should be taken under specific risk conditions, and the market exit strategies that should be taken when necessary.
Article 24 A banking financial institution shall establish a complete and reliable management information system for the identification, measurement, monitoring and control of country risks. In principle, the functions of the management information system should include:
（1） Help identify high-risk and suspicious transaction customers and their transactions;
（2） Support the measurement of different business areas and different types of country risks;
（3） Support country risk assessment and risk rating;
（4） Monitoring the implementation of country risk limits;
（5） Provide effective support for stress testing;
（6） Provide accurate, timely, continuous and complete country risk information to meet the requirements of internal management, regulatory reporting and information disclosure.
Article 25 A banking financial institution shall regularly and timely report to the senior management the situation of country risks, including but not limited to country risk exposure, risk assessment and rating, compliance with risk limits, handling of over limit businesses, stress testing, and the level of preparation and withdrawal. The reports of different levels and types shall follow the specified sending scope, procedures and frequency. Major risk exposures and exposures to high-risk countries or regions should be reported to the senior management at least quarterly. In the event that the risk exposure may threaten the bank's profits, capital and reputation, the banking financial institution shall report to the board of directors and senior management in a timely manner. Country risk should be included in the comprehensive risk management report.
Article 26 A banking financial institution shall establish a sound internal control system for country risk management to ensure that country risk management policies and limits are effectively implemented and observed, and that relevant functions are properly separated, such as business operation functions and country risk assessment, risk rating, risk limit setting and monitoring functions should remain independent.
Article 27 The internal audit department of a banking financial institution shall conduct an independent review of the effectiveness of the country risk management system on a regular basis, assess the implementation of the country risk management policies and limits, and ensure that the board of directors and senior management obtain complete and accurate country risk management information.
Chapter III Country Risk Preparation
Article 28 Banking financial institutions shall fully consider the impact of country risk on asset quality, accurately identify, reasonably assess and prudently predict the possible asset losses due to country risk.
Article 29 A banking financial institution shall formulate a policy for the provision of country risk reserves.
Article 30 When making provision for asset impairment, a banking financial institution shall fully consider the impact of country risk, the country risk rating, economic and financial conditions and other factors of the country or region where the client or counterparty belongs.
Article 31 Banking financial institutions shall classify country risks according to these Measures, and after considering the risk transfer factors, draw country risk reserves for country risk exposures by referring to the following standards, which shall be included in the general reserves of shareholders' equity, and comply with the relevant requirements of the Administrative Measures for the Provision of Reserves of Financial Enterprises.
（1） Accrual scope. Banking financial institutions should accrue country risk reserves for country risk exposures rated as medium, high and high risk. Among them, the provision scope of foreign risk exposure in the statement includes undrawn commitments and financial guarantee contracts, and the provision is made after conversion according to the credit conversion coefficient of off balance sheet items specified in the Capital Management Measures of Commercial Banks (for trial implementation).
（2） Accrual proportion. Medium country risk is not less than 5%; High country risk is not less than 15%; High country risk is not less than 40%.
Where a banking financial institution establishes an internal rating system for country risk, it shall clarify the corresponding relationship between the rating system and the country risk classification specified in these Measures.
The CBRC and its local offices may adjust the lower limit of the accrual ratio according to the changes of country risks, the operation and management of banking financial institutions, etc.
If a banking financial institution meets the minimum provision requirements for general reserves, it may not withdraw country risk reserves.
Article 32 Banking financial institutions shall continuously and effectively track and monitor the country risk of assets, and dynamically adjust the country risk reserves according to the changes of country risk.
Article 33 A banking financial institution shall require an external auditor to assess whether the asset impairment provision and country risk provision made by the institution have taken into account the adequacy, rationality and prudence of country risk factors when auditing its annual financial report.
Chapter IV Supervision and Inspection
Article 34 The CBRC and its local offices shall incorporate the country risk management of banking financial institutions into the continuous regulatory framework and assess the effectiveness of the country risk management of banking financial institutions. When reviewing the applications of banking financial institutions for the establishment, equity participation and acquisition of overseas institutions, the country risk management status is taken as an important consideration.
Article 35 A banking financial institution shall, in accordance with the relevant requirements of the off-site regulatory statements, report to the CIRC and its local offices on time the country risk exposure and preparation for withdrawal.
The CBRC and its local offices may, according to the actual situation, require banking financial institutions to increase the scope and frequency of reports, provide additional information, and implement stress tests.
In case of major economic, political and social events in a specific country or region, which have a significant adverse impact on the Bank's country risk level and management status, the banking financial institution shall report the risk exposure to that country or region to the CIRC and its local offices in a timely manner.
Article 36 A banking financial institution shall report its country risk management policies and procedures to the CIRC and its local offices. The CBRC and its local offices can inspect and evaluate the policies, procedures and practices of the country risk management of banking financial institutions, which mainly include:
（1） Performance of the Board of Directors and senior management in country risk management;
（2） The completeness and implementation of country risk management policies and procedures;
（3） Effectiveness of country risk identification, measurement, monitoring and control;
（4） Effectiveness of country risk management information system;
（5） Effectiveness of country risk limit management;
（6） Effectiveness of internal control over country risk.
Article 37 The CBRC and its local offices shall regularly assess the rationality and adequacy of the provision for country risk of banking financial institutions, and may require commercial banks with insufficient provision for country risk to take measures to reduce country risk exposure or improve the level of provision. The CBRC may partially or completely exempt the country risk reserve for a certain period of time for a specific range of country risk exposures of specific banking financial institutions.
Article 38 As for the problems related to country risk management found by the CBRC and its local offices in the supervision, the banking financial institutions shall submit the rectification plan within the specified time limit and immediately make rectification. The CBRC and its local offices may take regulatory measures according to law for banking financial institutions that fail to correct within the time limit or cause heavy losses.
Article 39 Where a banking financial institution violates the national risk supervision requirements of these Measures, the CBRC and its local offices may impose administrative penalties in accordance with the Banking Supervision Law of the People's Republic of China and other laws and regulations.
Article 40 Banking financial institutions shall regularly disclose country risk and country risk management in strict accordance with the relevant provisions of laws and regulations such as the Measures for Information Disclosure of Commercial Banks.
Chapter V Supplementary Provisions
Article 41 Financial asset management companies, trust companies, finance companies of enterprise groups, financial leasing companies, auto financing companies, foreign bank branches and other banking financial institutions approved by the CIRC shall be subject to these Measures.
Article 42 The CBRC shall be responsible for the interpretation of these Measures.
Article 43 These Measures shall come into force as of the date of promulgation. The Guidelines on Country Risk Management of Banking Financial Institutions (CBRF No. 201045) shall be repealed at the same time. Banking financial institutions shall meet the requirements of Article 31 of these Measures within six months from the date of promulgation at the latest.
2. Country risk assessment factors
3. Country risk classification standard
Annex 1
Main types of country risk
1、 Transfer risk
Transfer risk refers to the risk that the debtor is unable to obtain the required foreign exchange to repay its overseas debts due to insufficient domestic foreign exchange reserves or foreign exchange control and other reasons.
2、 Sovereign risk
Sovereign risk refers to the possibility that foreign governments are unable or refuse to pay their direct or indirect foreign currency debts.
3、 Risk of infection
Contagion risk refers to the risk that the adverse situation of a country will lead to the rating decline or credit crunch of other countries in the region. Although these countries have not suffered from these adverse conditions, their own credit conditions have not deteriorated.
4、 Currency risk
Currency risk refers to the risk that the local currency or cash flow held by the debtor is insufficient to pay its foreign currency debt due to adverse exchange rate changes or currency depreciation.
5、 Macroeconomic risks
Macroeconomic risk refers to the risk that the debtor's default risk increases due to significant macroeconomic fluctuations.
6、 Political risks
Political risk refers to the risk borne by the debtor due to political conflict, regime change, war and other situations in the country where the debtor is located, or the nationalization or expropriation of the debtor's assets.
7、 Indirect country risk
Indirect country risk refers to the risk that the repayment ability and willingness of domestic debtors with significant business relations or interests in a country or region will be reduced indirectly due to the increase of the above country risk.
Indirect country risk does not need to be included in the formal country risk management procedures, and banking financial institutions should take country risk factors into due consideration when assessing the credit status of domestic debtors.
Annex 2
Country risk assessment factors
1、 Political and diplomatic environment
（1） Political stability
（2） Balance of political forces
（3） Government governance
（4） Geopolitics and diplomatic relations
2、 Economic and financial environment
（1） Macroeconomic operation
1. Economic growth level, mode and sustainability;
2. Inflation level;
3. Employment;
4. Status of pillar industries.
（2） Balance of international payments
1. Current account status and stability;
2. Cross border capital flows;
3. The scale of foreign exchange reserves.
（3） Performance of financial indicators
1. Money supply;
2. Interest rate;
3. Exchange rate.
（4） Structure, scale and solvency of foreign debt
（5） Government financial situation
（6） The extent to which the economy is affected by the problems of other countries or regions
（7） Whether it is an international financial center, main market functions, completeness of financial market infrastructure and regulatory capacity
3、 System operation environment
（1） Financial system
1. Completeness of financial system;
2. Leverage ratio of financial sector and stability of capital source;
3. The matching between the financial development level and the real economy;
4. Banking financial institutions and non banking financial institutions;
5. Credit growth of non-financial sectors.
（2） Legal system
（3） Investment policy
（4） Compliance with international legal, commercial, accounting and financial regulatory standards, as well as information transparency
（5） The willingness and ability of the government to correct economic and budgetary problems
4、 Social security environment
（1） Social Civilization and Cultural Tradition
（2） Religious and ethnic contradictions
（3） Terrorist activities
（4） Other social problems, including but not limited to crime and public security, natural conditions and natural disasters, disease and plague, etc
Annex 3
Country risk classification standard
Low country risk: the political system of a country or region is stable, economic policies (whether in a boom or a bust) have been proved effective and correct, there are no foreign exchange restrictions, and there is a super ability to repay debts in a timely manner. At present and in the future, it can be predicted that there will be no country risk event that will lead to the loss of investment in the country or region, or even if the event occurs, it will not affect the solvency of the country or region or cause other losses.
Low country risk: the existing country risk expectation of the country or region is low and the solvency is sufficient, but there are some adverse factors that may affect its solvency or cause losses to the investment in the country or region at present and in the future.
Medium country risk: It refers to a country or region that has obvious problems in its repayment ability, which may cause certain losses to its loan principal and interest or investment.
High country risk: the country or region has a cyclical foreign exchange crisis and political problems, and the credit risk is relatively serious. Debt restructuring has been implemented but the debt still cannot be repaid on time. The debtor of the country or region cannot repay the loan principal and interest in full. Even if the guarantee is implemented or other measures are taken, it will certainly cause large losses.
High country risk: It means that a country or region has economic, political, social unrest and other country risk events or a high probability of such events. After taking all possible measures or all necessary legal procedures, the loan principal and interest or investment in that country or region may still be unrecoverable, or only a small part can be recovered.
