Swap policy (forward rate policy)

The central bank – sells USD to domestic banks by spot and – buys them back by forward at a contractually agreed rate. – At the ECB, foreign exchange swap operations are used to provide liquidity by taking USD against EUR for a limited period of time or to absorb liquidity by taking EUR against USD. These operations are a special instrument of money supply management. For banks, such transactions with the central bank are without risk. – See foreign exchange forward, foreign exchange swap, reverse repurchase agreement, swap carousel, swap rate.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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