The European Central Bank (ECB) and the People´s Bank of China (PBC) have agreed to extend their bilateral currency swap for another three years. The banks made the announcement last week.

According to the release, the swap has a maximum size of 350 billion Chinese renminbi and 45 billion euros. These can be used as backstop liquidity facility if there is potential shortage of the Chinese renminbi in the euro area.

– The ECB and the PBC established the first three-year bilateral currency swap arrangement on 8 October 2013 with a maximum size of 350 billion in Chinese renminbi and €45 billion, which was subsequently extended in 2016 for another three-year period. The arrangement with the PBC reflects rapidly growing bilateral trade and investment between the euro area and China, the release says.

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