Transfer and Convertibility Risk in the Age of Economic Statecraft

The Sovereign, Economic and Geopolitical Risk Group (SERG) at Goldman Sachs manages systemic country risk through macro-surveillance, sovereign risk analysis, and scenario design. Transfer and Convertibility (T&C) risk is a critical and evolving dimension of country risk that happens when a sovereign restricts currency conversion or cross-border funds transfers. While traditionally linked to balance-of-payments stresses and macroeconomic fragility, T&C risk is increasingly shaped by geopolitical forces, particularly sanctions and financial statecraft deployed by major Western powers.

This project aimed to develop a comprehensive T&C Risk Scorecard to assess sovereign vulnerability to disruptions in foreign currency access, with a particular focus on U.S. dollar dependency and alternative currency substitution risk. The framework sought to distinguish between two primary event triggers: fundamentally-driven capital controls arising from macroeconomic imbalances, and geopolitically-driven restrictions limiting access to global financial systems. The team developed a Random Forest model that integrated historical macroeconomic, financial, and trade data from five major sources (IMF, World Bank, FRED, UN COMTRADE, BIS) to generate dynamic T&C crisis risk probabilities across 140 countries.