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.”