Reciprocal Currency Arrangement
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Definition of 'Reciprocal Currency Arrangement'
Temporary arrangement between central banks to maintain a supply of a country’s currency for trade with other central banks at a specified exchange rate. A reciprocal currency arrangement is only intended for overnight or short-term lending in order to maintain reserve requirements, liquidity and to keep financial markets functioning smoothly.
Also known as a swap line or swap network.
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Investopedia explains 'Reciprocal Currency Arrangement'
Reciprocal currency arrangements exist to provide short-term access to foreign currencies. In the U.S., for example, a reciprocal currency arrangement entails both a spot (immediate delivery) transaction, where the Federal Reserve transfers dollars to a central bank and receives foreign currency in exchange; and a concurrent forward (future delivery) transaction, where the two central banks consent to reversing the spot transaction at a specified date. One purpose of a reciprocal currency arrangement is the support of a country’s currency during periods of uncertainty or unusual market disruptions.
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Search results for 'Reciprocal Currency Arrangement'
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http://financialedge.investopedia.com/financial-edge/0809/Bartering-Through-A-Cash-Crisis.aspx
... dating to before hard currency even existed ... exchange through the International
Reciprocal Trade Association ... tax implications of your arrangement because the IRS ...
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