Understanding potential of the CHF-RMB swap line

By Felix Egli, Wu Fan, Vischer

On 21 July 2014, the Swiss National Bank (SNB) and People’s Bank of China (PBoC) announced a reciprocal three-year, Swiss franc-renminbi (CHF-RMB) currency swap line with a maximum swap value of RMB150 billion (23.3 billion Swiss francs, or US$24.4 billion).

Currency swap lines allow central banks to purchase and repurchase currencies from one another within a fixed term and a capped amount.

Felix Egli 菲谢尔律师事务所 高级合伙人、中国业务部主管 Senior Partner, Head of China Desk VISCHER
Felix Egli
Senior Partner, Head of China Desk

The Chinese agenda

Since 2008, in the aftermath of the latest global financial crisis, China started negotiating swap lines with its trading partners.

The global financial crisis of 2007-2008 shook the Chinese export industry. Since the renminbi is not free ly convertible, most payments in and out of China were, and still are, made not in renminbi but mainly in US dollars. It is easy to calculate the loss that Chinese exporters suffered with each cent the US dollar depreciated during the financial crisis in 2007.

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