Swap transaction refers to the transaction form in which both parties agree to exchange certain assets in a certain period in the future. More precisely, he said, a swap transaction refers to a transaction in which both parties agree to exchange cash flows with each other in a certain period in the future. Common ones are currency swap and interest rate swap. Currency swap refers to the swap transaction between two currencies, generally referring to the exchange of capital and principal of two currencies. Interest rate swap transaction is a swap transaction between different interest rates of the same monetary fund, which is generally not accompanied by the exchange of principal. Swap trading, like futures and options trading, is one of the financial derivatives that have developed rapidly in recent years and has become an important tool for international financial institutions to avoid exchange rate risk and interest rate risk.

198 1 year, IBM and the World Bank conducted currency swap transactions between Swiss francs, German marks and US dollars (as shown in Figure 3- 1). At that time, the World Bank was able to raise dollars in eurodollar market under favorable conditions, but what it actually needed was Swiss francs and German marks. At this time, IBM, which holds Swiss francs and Deutsche Mark funds, just wants to change these two currency forms into dollars to avoid interest rate risks. Under the intermediary of salomon brothers Company, the World Bank provided the US dollar funds raised at low interest rates to IBM Company, and IBM Company provided its own Swiss francs and Deutsche Mark funds to the World Bank. Through this swap transaction, the World Bank raised the required Swiss francs and German marks on more favorable terms than its own funds, while IBM avoided the exchange rate risk and raised the US dollar funds at low cost. This is the first officially announced currency swap transaction in the world so far. Through this swap transaction, the World Bank and IBM raised the required funds at low cost without changing the legal relationship with the original creditors.

1982 Deutsche Bank conducted an interest rate swap transaction. Deutsche Bank provides a long-term floating interest rate loan to an enterprise. At that time, Deutsche Bank needed to raise long-term funds for long-term loans, and at the same time judged that interest rates would rise, so it might be more beneficial to raise long-term funds in the form of fixed interest rates. Deutsche Bank raises long-term funds by issuing long-term fixed-rate bonds, converts fixed interest rates into floating interest rates through interest rate swaps, and then issues long-term floating-rate loans to enterprises. This transaction is considered to be the first formal interest rate swap transaction.

Under the background of the trend of international financial market integration, as a flexible and effective hedging and derivative tool for integrated management of assets and liabilities, the trading volume has increased rapidly (see Table 3-2). Recently. This form of transaction has gradually expanded to areas other than exchange rate and interest rate, such as commodities and stocks. Due to the complexity of swap contracts, they usually take the form of one-to-one direct transactions between the two parties, lacking an active secondary market and openness of transactions, which has greater credit risk and market risk. Therefore, most of the people engaged in swap transactions are international financial institutions with strong strength and risk control ability, and the swap market is basically an inter-bank market. In recent years, the Bank for International Settlements (BIS) and the International Association of Swap Dealers (ISDA), both self-regulatory organizations of swap dealers, have successively formulated a series of guidelines and standards for regulating swap transactions, and their risk management has been paid more and more attention by traders and regulators.