Sino-Russian currency swap agreement

1basic information

since December 2008,People's Bank of Chinahas signed bilateral local currency swap agreements with the central banks or monetary authorities of 36 countries and regions, including Hong Kong, Singapore, Malaysia, Russia, the United Kingdom and the European Union, with a total amount of 3.04 trillion yuan. Through this agreement, either party can initiate a transaction to exchange a certain amount of local currency for the equivalent value of the other party's currency. The following is an example of a RMB financing initiated by the other party to explain the initiation mechanism:

Diagrams

2Main Details

have a few more details to add:

1. The agreement is of a standby nature at the time of signing, and there is no debt relationship between the two parties before the actual initiation and use.

2. In step 1, the amount to be exchanged is calculated at the exchange rate on the date of the transaction (rather than the fixed exchange rate set in advance).

3. In the first step, the local currency exchanged by both parties and the amount at the time of initiation remain unchanged, and the interest rate paid by the other party is agreed on the basis of our interbank interest rate.

from the above introduction, we can see that since we issue and recycle in local currency, we do not bear the exchange rate risk. After the launch of the swap, the parties will also periodically adjust the swap amount according to the latest bilateral exchange rate to reduce the amount of the swap due to fluctuations in the exchange rate of one party's currency.Pledgeimpairment.

interested partners can also click on the following link to the Bank of Korea website to see how the other central bank regulates the use of local currency swap funds by its commercial banks in practice.