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Document Type

Case Study

Case Series

Central Bank Swap Lines

Abstract

In 2014, Argentina’s economy faced multiple crises: recession, currency devaluation, default, and inflation. In July 2014, the People’s Bank of China (PBOC) and the Central Bank of Argentina (BCRA) entered into a bilateral currency swap agreement with a three-year term for 70 billion renminbi (RMB; USD 11 billion). The swap line was meant to promote trade and development, facilitate investment in the renminbi, and boost Argentina’s foreign reserves. In December 2014, Argentina’s central bank drew on the line for a total of USD 1.5 billion worth of renminbi. In 2015, the central bank made three draws for a total of USD 7.2 billion worth of renminbi. On December 16, 2015, the PBOC and BCRA signed a supplementary agreement that allowed the BCRA to convert up to RMB 20 billion in proceeds from draws under the swap arrangement through the PBOC into dollars to boost its US dollar reserves to help it manage its exchange rate. The two central banks renewed their swap arrangement in 2017, expanded it by RMB 60 billion in 2018, and renewed it for an additional three years in 2020. Media reports said in November 2022 that the parties agreed to expand the swap arrangement to 135 billion renminbi, but no press releases have been issued at the date of writing.

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