These swap lines have never really been used. Even during the financial crisis, when Korea obtained up to $16.4 billion from its swap line with the Federal Reserve, neither Korea nor any other country that was a party to these agreements used it to obtain foreign exchange. While the amounts available beyond Chiang Mai were potentially large enough to significantly increase a country`s reserves, IMF conditionality (for borrowing over 30% of a country`s quota) was a great deterrent to the use of Chiang Mai funds; On the other hand, borrowing the full amount available through the Fed`s swap lines did not require an IMF program. During the crisis, banks were very reluctant to lend to each other, fearing the real financial situation of counterparties. This has pushed up the cost of credit, with lenders demanding higher interest rates to offset the increase in counterparty risk. While central banks could provide local currency to their domestic banks in order to reduce the cost of borrowing in that currency, their ability to provide foreign currency was limited by the level of foreign exchange reserves they held. In order to tackle these foreign currency financing problems, the central banks of industrialized countries have agreed to set up swap lines between them. Overall, China limits the amount of renminbi available for trade settlement and swaps have been used to obtain the renminbi after reaching these limits. In October 2010, the Hong Kong Monetary Authority and the People`s Bank of China (PBoC) exchanged 20 billion yuan (about $3 billion) to allow Hong Kong companies to trade renminbi with the mainland. In 2014, China used its swap line with Korea to obtain 400 million won (about 400,000 $US). The won were then loaned to a commercial bank in China which used them to finance trade for the payment of imports from Korea.
In reality, these are just a few isolated cases where exchange agreements have actually been concluded. Of China`s 35 AAs, very few have been effective in facilitating trade between China and its trading partners. The agreements certainly strengthen China`s diplomatic influence as a short-term bank of average liquidity when Western institutions are not available; However, the impact on trade has been very small. At the end of this page, you can explore in detail the evolution of the central bank`s currency swewings over time using an interactive map. The following introductory slideshow will soon show you how these agreements have evolved year after year with regard to central banks and the amount of funds involved. However, like Argentina and Pakistan, this agreement may have been a targeted safeguard measure. Russia resorted to BSA when Western sanctions caused the ruble to fall sharply. By using Chinese BSAs, Russia was able to undermine the sanctions imposed by the US, as the sanctions largely targeted operations using the USD – if Russian transactions were carried out in an alternative currency, they could circumvent all restrictions. Therefore, the alleged increase in Chinese and Russian trade would have been fueled by Russia`s intention to apply a strategy of “dedollarization” or avoiding US sanctions, contrary to reasons related to the value of the RMB as an international currency. In 2013, renminbi-denominated deposits in Paris amounted to 10 billion yen, making it the second largest pool of Chinese currencies in Europe after London.  While China has favored an internationalized renminbi in recent years, it has been cautiously juggling the three facets of the “impossible trinity,” while slowly relinquishing control of its capital account and managed float monetary regime. The introduction of the young currency into the world, however, has remained in retreat due to the country`s lack of willingness to fully liberalize capital flows.
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