Currency swap (also known as currency swap) refers to the exchange between two debt funds with the same amount, the same term and the same interest rate calculation method, but with different currencies, and also the currency swap with different interest amounts. Interest rate swap is a swap between debts in the same currency, while currency swap is a swap between debts in different currencies. Currency swap parties exchange currencies, and their respective creditor-debtor relationships have not changed. The exchange rate of the initial swap is calculated according to the agreed spot exchange rate. Currency swap agreement is an agreement signed by the central banks of the two countries, stipulating how much currency can be exchanged at a certain exchange rate in a certain period of time. Currency swap agreements generally include: time, exchange rate, quantity and currency type. (Currency swap) Similar to parallel loans or back-to-back loans. Parallel loan or back-to-back loan means that companies in two different countries borrow each other's currency for a certain period of time and agree to return the borrowed currency at a future date. That is, two companies with different nationalities provide loans to each other's subsidiaries in their own countries.

Both American parent companies and Swiss parent companies need to raise funds from subsidiaries. If you remit money directly in local currency, you need to go through the foreign exchange market and be subject to foreign exchange control. If the two parent companies concerned sign a parallel loan agreement, convert it into the loan amount of the other country at the agreed exchange rate and lend it to the subsidiary of the other country at the agreed interest, foreign exchange control can be circumvented without guarantee. If one party defaults, it can be offset by the debt of the other party.

In currency swap, the two sides of the swap do not borrow money from each other, but sell the money to each other through agreement and promise to exchange it on a fixed date in the future.