The risk that a central bank will impose foreign exchange regulations that will reduce or negate the value of foreign exchange contracts. Also refers to the risk of government default on a loan made to a country or guaranteed by it. The government's part of political risk. Bloomberg Financial Dictionary
* * *
* * *
Risks associated with lending funds to, or making an investment in, a particular country. Also known as country risk.
* * *
sovereign risk UK US noun [C or U] FINANCE, ECONOMICS
► COUNTRY RISK(Cf. ↑country risk): »
Such investments involve sovereign risk in addition to the normal risks associated with securities of US issuers.
Financial and business terms. 2012.