Most banks use demand guarantee. Once the demand guarantee is issued, the bank will become the first payer and bear great risks. Therefore, in order to reduce risks, banks should pay attention to the following issues when opening a demand guarantee:

(1) The letter of guarantee shall specify the payment terms, including the specific amount of guarantee, beneficiary, client, and the validity period of the letter of guarantee.

(2) The bank requires the client to provide corresponding counter-guarantee or provide a certain amount of deposit, and the bank issues a letter of guarantee within the amount of deposit.

(3) A letter of guarantee issued by a bank to an overseas beneficiary is an external guarantee, and attention must also be paid to the legal provisions of external guarantee, such as reporting it to SAFE for approval.

(4) When issuing the letter of guarantee, the bank should also carefully examine the authenticity of the basic contract to prevent fraud.