Sveriges Riksbank, Norges Bank and the Danish National Bank announced that their agreement came into force on the same day. The ECB set up swap lines with Sweden in December 2007, the SNB and Denmark in October 2008 and the Bank of England in December 2010. The euro area, Sweden, Denmark and the United Kingdom have relatively low foreign exchange reserves, which have been in times of crisis, as the costs of holding reserves and assuming an increase in demand in the foreseeable future are too low. However, banks in these countries borrowed large amounts of foreign currency in the years leading up to the crisis. When it became difficult for them to borrow money in 2008, they turned to their central banks, whose reserves proved insufficient to meet unexpected demand. The ECB swap lines were therefore set up in 2009 to provide Sweden and Denmark with euros to reload their foreign exchange reserves, and the swap line with the central bank was invited to provide Swiss francs to the ECB. 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 sterling but was never used. Since 2007, Sweden and Denmark have more than doubled their foreign exchange reserves, the UK has doubled its reserves and the euro area has increased its reserves by 20%. This agreement will allow India and Japan to trade in their own currencies and ease pressure on India`s current account balance.

At the end of this page, you can explore in detail the development of central bank currency swets through an interactive map. The introductory slideshow that follows shows you briefly how these agreements have evolved year after year with respect to central banks and the amount of funds involved. Since 2009, China has signed bilateral currency exchange agreements with 32 counterparties. The stated intention of these swaps is to support trade and investment and to promote the international use of the renminbi. Initially, the ECB said it was prepared to make available to Hungary, Latvia and Poland only through euro banknotes, in which bonds are held as collateral rather than money, but which have finally expanded a normal trading line to Hungary. Switzerland has also made Swiss francs available to Poland and Hungary for euros. Many households in Poland and Hungary had taken out foreign-currency-denominated mortgages as a result of lower interest rates.

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