The Risk Control And Prevention Of Letter Of Credit Of China's E Policy Bank

Due to the trade wars,tightening of monetary,financial conditions,and geopolitical risks,global financial markets also experience greater turmoil.The globalization and multilateral relations between different countries are constantly changing.The Chinese economy has also experienced many challenges.The domestic economic growth rate has declined significantly which put much pressure to Chinese economy.However,the domestic development of international business which made the letter of credit as a trade method still playing an important role in the world.Letter of credit can not only relieves the contradiction of the trust crisis between buyers and sellers in modem international trade,but also make it easy to obta:in bank's financing.However,the real economic risks are constantly released,and risks hidden in the letter of credit business are also highlighted.Therefore,in trade finance practice,banks must raise their awareness of risk prevention and avoid unanticipated losses.Safe trade is still in the most important position.This paper consists of six chapters:Chapter 1 is an overview of the study which contains research background,the main problems and the significance of the study and the research framework.The second chapter is literature review,including some basic concepts,relevant laws and policies of L/C in China,and the study of L/C risks in China.Chapter three introduces the development course and current situation of L/C of E-policy bank,which lists the advantages and disadvantages and its business model.Chapter 4 mainly analysis the five main risks under L/C and case study.The fifth chapter is about the control and prevention against the main risks to E-policy bank.Chapter 6 is the conclusions and suggestions of the study.Through the analysis of domestic and foreign trade and financial environment of the present situation of E-bank's letter of credit,I starting with the analysis of five most important risks,comes to conclusion that in order to deal with the endless risks in global trade,E-policy bank should establish a pre-event,in-event and post-event risk management system,assess customer's qualifications,pay attention to the authenticity of the trade background,control the cash flow,establish risk control points and operational mechanisms.The cultivation of professional quality of employees and improvement of their risk identification ability and the use of the latest technology and means to prevent the risks of the letter of credit throughout the process is a must.