Asian Currency

Chinese central bank chief highlights $550bn currency swap ‘safety net’

BOAO, China (Reuters) — China’s central bank will continue to promote currency swaps and strengthen monetary cooperation with Asian economies to maintain regional financial stability, the bank’s governor said on Wednesday.

Bilateral currency swaps can facilitate trade and investment and are a useful addition to the global financial safety net, Gov. Pan Gongsheng told the annual gathering of the Boao Forum for Asia.

“Bilateral currency swaps can provide emergency liquidity support in times of turmoil in international financial markets and banking crises in some countries,” he said.

The central bank has signed bilateral local currency swap agreements with the central banks and monetary authorities of 29 countries and regions, with the total size of about 4 trillion yuan ($553.49 billion), according to Pan.

Asian countries should also push reforms of quotas and voting shares of the International Monetary Fund to enhance the treatment of emerging markets, said Pan.

“China’s bilateral currency swaps with selected countries also formed an important part of IMF-led international bailout relief package,” Pan added.

Argentina had planned to tap several billion dollars in disbursements from the IMF to repay China part of the money it borrowed through a currency swap line, Reuters reported last year.

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