Document Type

Case Study

Case Series

Central Bank Swap Lines


Starting in 2008, the People’s Bank of China (PBOC) began to grow a global network of central bank swap lines, announcing six in 2008–09 alone. The largest of those lines, in January 2009, was a 200 billion renminbi (RMB; USD 29.2 billion) swap line to the Hong Kong Monetary Authority (HKMA). The PBOC and HKMA, in similarly worded announcements, mentioned two goals of the swap arrangement: to promote renminbi-denominated trade settlement in Hong Kong and to promote financial stability in Hong Kong and the region. Hong Kong was the most important offshore financial center for trading renminbi-denominated securities, and the swap lines enabled the HKMA to promise market participants that it would be able to make renminbi liquidity available in a crisis. In October 2010, in response to tightening offshore renminbi liquidity conditions as the local Hong Kong trade settlement bank reached a PBOC-set conversion quota, the HKMA drew on the line for RMB 20 billion to support renminbi trade settlement in Hong Kong. However, the HKMA ultimately extended no renminbi loans to Hong Kong banks during that episode. The HKMA and PBOC increased the swap line size and extended its terms over time. In 2022, they converted it into the PBOC’s first standing swap facility, with an authorized amount of RMB 800 billion.