Currency swaps are 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.