The European Central Bank (ECB) and the People’s Bank of China (PBOC) have renewed their bilateral currency swap arrangement for a further three years, maintaining a maximum size of CNY 350 billion and €45 billion.
The agreement, first established in 2013, will now run until 8 October 2028. From the Eurosystem’s perspective, the facility acts as a backstop to address sudden and temporary renminbi (CNY) liquidity shortages for euro area banks in the event of market disruptions.
The terms of the arrangement are unchanged from the previous period. The ECB frames the line as a contingency, allowing the central bank to provide CNY liquidity to eligible euro area counterparties should the renminbi market become impaired. The renewal is consistent with earlier extensions in 2016, 2019 and 2022.
Currency swap lines enable two central banks to exchange currencies and later reverse the transaction on pre-agreed terms. In practice, if activated, the ECB would obtain renminbi from the PBOC and lend it on to euro area banks through standard tender procedures, with those banks posting euro-denominated collateral. Such facilities are designed to prevent funding strains from transmitting through the banking system when market access to a foreign currency tightens.
The ECB maintains a broader framework of standing swap lines with other major central banks, including the Federal Reserve, the Bank of England, the Bank of Japan, the Swiss National Bank and the Bank of Canada. During recent episodes of stress, notably the pandemic and the period following Russia’s full-scale invasion of Ukraine, the ECB also relied on temporary swap and repo lines to accommodate heightened foreign-currency liquidity needs. The euro–renminbi line sits alongside these arrangements as part of the ECB’s toolkit for managing cross-border liquidity risks.
The 2013 agreement marked the ECB’s first bilateral swap with the PBOC. It was presented at the time as a step to support trade and investment between the euro area and China and to provide a safety net for euro area banks operating with renminbi exposures. The structure and size set in 2013 have endured through each renewal cycle.
Today’s extension comes against a backdrop of deep trade links between the European Union and China. In 2024, the EU exported goods valued at about €213 billion to China and imported roughly €519 billion, leaving a goods trade deficit of just over €300 billion. While trade flows have moderated from 2022 peaks, China remains a major counterpart for EU goods trade, underscoring the relevance of infrastructure that can stabilise cross-currency funding if frictions arise.
At the same time, the renminbi’s use in international payments remains limited relative to the dollar and the euro. SWIFT’s RMB Tracker shows the renminbi ranked sixth by value in July 2025, with a global payments share of about 2.9% and a similar position within trade finance instruments. This profile helps explain why targeted liquidity backstops can matter: episodic dislocations in a thinner offshore CNY market can have outsized effects on banks’ short-term funding, even if underlying trade links are sizeable.
Neither central bank indicated any change to the operational mechanics of the swap or to eligible counterparties. The ECB’s standard language emphasises that liquidity-providing arrangements contribute to financial stability and are consistent with the scale of bilateral economic ties. There was no disclosure on past usage; historically, ECB foreign-currency lines are intended as precautionary facilities and are only drawn in periods of market stress.
The renewal takes effect immediately and ensures the facility remains available through early October 2028. For euro area institutions with renminbi positions—whether related to trade settlement, client activity or market-making—the line provides an explicit channel through which the ECB can supply CNY funding if market liquidity becomes impaired. The size and terms mirror previous iterations, signalling continuity in the central banks’ approach to contingency planning for cross-border liquidity.
