The European Central Bank (ECB) and the People’s Bank of China (PBC) have decided to extend for another 3 years, until 8 October 2022, their bilateral currency swap arrangement at unchanged conditions.
What made ECB and PBC extend their bilateral currency swap arrangement?
According to ECB’s statement, the arrangement will help serve as a backstop facility to address potential sudden and temporary liquidity shortages in euro area banks due to disruptions in the renminbi market.
From a Eurosystem perspective, the liquidity providing arrangements will contribute to global financial stability.
The currency swap arrangement with the PBC reflects rapidly growing bilateral trade and investment between the euro area and China, it stated.
The ECB and the PBC established their first three-year bilateral currency swap arrangement on 8 October 2013 with a maximum size of 350 billion in Chinese renminbi and €45 billion, which was subsequently extended in 2016 for another three-year period.
