Central government should be treated as a single entity for reporting purposes. Usually, entities like government departments, ministries and other governmental authorities altogether constitute the central government and do not take up loans in their own name. In this case, they should be regarded as one single entity and the exposure be reported in one sum under the name of the central government. However, if there are entities in the form of separate legal persons that, for example, fulfil public tasks by order of the central government , but can take up their own loans, they are to be considered as distinct borrowers (i.e. Public Sector Entities). If, in the latter case, the entity is controlled by / interconnected with the central government, the two of them would constitute a group of connected clients.

As concerns the assessment of groups of connected clients, Article 4(1)(39) of Regulation (EU) No 575/2013 (CRR) provides a choice to the institutions. As an illustration, assume that the central government A (as defined above) directly controls entity B and B controls B1 and B2. In addition, A also directly controls company C, which again controls C1 and C2 and C2 controls C2.1 and C2.2. In the case of central governments, not all these entities have to be regarded as one single group of connected clients. Instead, according to Article 4(1)(39) of the CRR, the institution may assess and report the risks separately, meaning that A, B, B1 and B2 form one group of connected clients and that A, C, C1, C2, C2.1 and C2.2 form another group of connected clients.