What Is Bilateral Swap Agreement

On March 19, 2020, the United States opened temporary swap arrangements with the central banks of Australia, Brazil, Denmark, South Korea, Mexico, New Zealand, Norway, Singapore, and Sweden, which are expected to last at least six months for a total of $450 billion. The foreign currency that the home bank acquires is an asset on its balance sheet. In Tables 1, 9 and 10 of the statistical publication H.4.1, the dollar value of amounts drawn but not yet repaid by foreign central banks is shown in the line “Central bank liquidity swaps”. [13] Since the swap is settled at the same exchange rate as that used in the first draw, the dollar value of the asset is not affected by changes in the market exchange rate. Dollar funds deposited in accounts that foreign central banks maintain with the Federal Reserve Bank of New York are a liability of the Federal Reserve. In principle, the prints would first appear in Tables 1, 9 and 10 in the row “foreign and official deposits”. . . .



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