The European Central Bank (ECB) and the People’s Bank of China (PBOC) today announced the successful testing of their bilateral currency swap arrangement.
The arrangement was established in October 2013, with a maximum size of RMB 350 billion and EUR 45 billion. As part of the ECB’s plan to regularly test its operational capabilities, the two institutions conducted two tests in April 2015 and November 2015 providing symbolic amounts of euro and renminbi liquidity. These tests also involved the participation of a limited number of Chinese and Eurosystem counterparties.
The ECB and the PBOC said today the tests were successful and that they demonstrated the readiness of the institutions to activate the swap if needed on the basis of bilaterally agreed operational procedures.
In today’s announcement, the ECB notes that the scheduling of such tests is not related to certain market conditions and should not be regarded as an indicator of any intention of the central banks to request funds from each other to provide counterparties with liquidity in the respective currency.
To view the press release from the ECB on the tests, click here.