Inconvertibility Coverage

Inconvertibility Coverage

Insurance that covers losses resulting from the inability to change one currency for another. Inconvertibility is the state in which a currency may not be exchanged for a foreign currency. Inconvertibility coverage reduces the risk associated with this possibility. For example, if one makes a capital gain on an investment denominated in Currency A, but cannot exchange it for Currency B, inconvertibility coverage will provide compensation.
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A large investment bank making a loan in Argentina for a major infrastructure project would want to have currency inconvertibility coverage to make sure it can get loan payments out of the country.