ECB to Create Currency Swap Line With China Central Bank

WASHINGTON—The European Central Bank said Thursday it will create currency swap lines with China’s central bank, a sign of China’s growing importance in Europe’s trade and financial transactions.

Under the agreement, which lasts three years, the ECB will have access to as much as 350 billion yuan ($57 billion) while China’s central bank will be able to tap €45 billion ($60.9 billion) from the ECB. Currency swap lines allow central banks to purchase and repurchase currencies from one another.

The aim of the lines is to help financial institutions meet unexpected needs for foreign-denominated funds. The ECB already has swap agreements with the U.S., U.K., Canada and Switzerland.

“The swap arrangement is intended to serve as a backstop liquidity facility and to reassure euro area banks of the continuous provision of Chinese yuan,” the ECB said in a statement.

Benoît Coeuré , a member of the ECB’s executive board, said the new arrangement “acknowledges the rapidly growing role of Chinese yuan in international financial flows and the relevance of international cooperation to accompany this internationalization process.”

Via ECB to Create Currency Swap Line With China Central Bank – WSJ.com.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s