Blue Chip Swap

DEFINITION of 'Blue Chip Swap'

When a domestic investor purchases a foreign asset and then transfers that asset to a domestic bank branch located offshore. Then, the funds from the foreign asset are transfered into a bank account in the domestic country. The domestic investor usually has a partner transferring assets to the foreign branch on his or her behalf.

BREAKING DOWN 'Blue Chip Swap'

Blue chip swaps, which were performed in Brazil during the late '90s, were a result of a law that reduced the amount of capital inflow into the country. The law prohibited direct foreign investments in the country's derivative markets, but blue chip swaps allowed this type of investment to continue.

RELATED TERMS
  1. Foreign Branch Bank

    A type of foreign bank that is obligated to follow the regulations ...
  2. International Banking Act of 1978

    Federal banking legislation that put all domestic bank branches ...
  3. Foreign Bond

    A bond that is issued in a domestic market by a foreign entity, ...
  4. Foreign Investment

    Flows of capital from one nation to another in exchange for significant ...
  5. Foreign Currency Effects

    The gain or loss on foreign investments due to changes in the ...
  6. Shell Branch

    A branch location of a U.S. chartered bank located outside the ...
Related Articles
  1. Investing

    Explaining Interest Rate Parity

    Interest rate parity exists when the expected nominal rates are the same for both domestic and foreign assets.
  2. Personal Finance

    How To Open And Access An Offshore Bank Account

    You don't have to be a master criminal or billionaire to open an offshore bank account. This article will walk you through the process.
  3. Managing Wealth

    Broadening Your Portfolio's Borders

    Find out what type of international fund might suit your needs in gaining exposure to foreign markets.
  4. Investing

    This Blue Chip Is Up 16% Since January -- Is It Still A Buy?

  5. Personal Finance

    Should You Open A Foreign Savings Account?

    Would opening a savings account in a foreign bank make sense for you? The pros and cons, how to establish one – and alternatives to consider.
  6. Personal Finance

    Transferring Credit Card Balances To A New Card

    Before you take advantage of that new credit card's 0% interest balance transfer offer, read our step-by-step guide.
  7. Markets

    How To Open And Access An Offshore Bank Account

    Opening an offshore bank account does not require a high level of financial sophistication. It’s a lot like opening an account at your neighborhood bank.
  8. Managing Wealth

    What does "Blue Chip" Mean?

    Describing a business as “blue chip” comes from the game of poker, where blue chips are the most valuable.
  9. Markets

    What Is The Balance Of Payments?

    The balance of payments helps countries to track how much money is coming in and how much money is going out. Learn more about BOPs here.
  10. Trading

    6 Factors That Influence Exchange Rates

    An in depth look at out how a currency's relative value reflects a country's economic health and impacts your investment returns.
RELATED FAQS
  1. What are the components of a financial account?

    Understand what the financial account is and how it relates to a country's balance of payments. Learn about the components ... Read Answer >>
  2. What is the difference between a financial account and a capital account?

    Understand the components of a country's balance of payments. Learn about the difference between a country's financial account ... Read Answer >>
  3. What types of assets and payments are recorded in the capital account?

    Read a brief overview of the definitions of the capital account, where it is used, and what types of assets and payments ... Read Answer >>
  4. What does it mean when a country has little activity in its capital account?

    Know what a country's capital account represents and understand what the implications are if a country has little activity ... Read Answer >>
  5. I live in the U.S. How can I trade stocks in China and India?

    Foreign markets have always been an object of envy to domestic investors because the indexes in some foreign countries have ... Read Answer >>
  6. What does a negative balance in the capital account mean?

    Understand what a country's capital account represents and the significance of a negative, or deficit, balance in the capital ... Read Answer >>
Hot Definitions
  1. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  2. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  3. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  4. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  5. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  6. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
Trading Center