In October 2013, the PBC and the ECB signed a bilateral local currency swap arrangement for the purpose of supporting bilateral economic and trade activities and ensuring the stability of financial markets. Based on the friendly cooperation and negotiation, the PBC and the ECB conducted two tests in April 2015 and in November 2015 that provide symbolic amounts of euro and RMB liquidity respectively. The funds involved in the tests were ultimately allocated to a limited number of Chinese and Euro system counterparties. The tests were successful through smooth proceeding, and provide the PBC’s and the ECB’s operational readiness to activate the swap immediately if needed on the basis of bilateral agreed operational procedures.
The arrangement of bilateral currency swap serves as a backstop facility to provide liquidity support in aims to promote further development of both Chinese and European financial market. The arrangement facilitates trade and investment activities between China and Europe and it is a recognition of further achievement on the monetary and financial cooperation between the PBC and the ECB.
