Recently, the People’s Bank of China announced that it has renewed a bilateral local currency swap agreement with the Central Bank of Turkey. The swap scale is 35 billion yuan / 189 billion Turkish lira.
The agreement is valid for three years and can be extended with mutual consent. Meanwhile, the two sides also signed a memorandum of cooperation on establishing a RMB clearing arrangement in Turkey.
The People’s Bank of China stated that the above arrangement marks a new stage in financial cooperation between China and Turkey, which will facilitate cross-border settlements by enterprises and financial institutions of the two countries in their own currencies and further promote the facilitation of bilateral trade and investment.
Background on Bilateral Local Currency Swap Agreements
After the global financial crisis in 2008, the People’s Bank of China successively signed bilateral local currency swap agreements with foreign central banks or monetary authorities. Over the years, bilateral local currency swaps have played a positive role in maintaining global financial stability, providing liquidity support, and supporting bilateral trade and investment in many aspects.
Current Status of Bilateral Local Currency Swap Agreements
It is learned that after the renewal of the agreement with the Central Bank of Turkey, the People’s Bank of China has signed bilateral local currency swap agreements with the central banks or monetary authorities of 32 countries and regions, with a total scale of approximately 4.5 trillion yuan.
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