What Is Bilateral Currency Swap Agreement

The swap line with the Bank of England was set up as a precautionary measure to ensure that the Central Bank of Ireland, which is part of the Eurosystem, had access to the pound sterling, but it was never used. Since 2007, Sweden and Denmark have more than doubled their foreign exchange reserves, the United Kingdom has doubled its reserves and the euro area has increased its reserves by 20%. Pakistan and Argentina are two of the few countries that have operated their BSAs, but not in the traditional sense. In times of financial crisis, Pakistan and Argentina used the agreements to preserve the RMB and convert it into USD in offshore markets. So far, Chinese BSAs have failed to significantly advance the internationalization of the RMB. Although there are many agreements, the RMB does not have a solid framework for countries to assess it higher than the USD or the Euro.