RBI Revises SAARC Currency Swap Framework for 2024-2027
A new system for currency swaps between SAARC countries has been set up, covering the years 2024–2027. This is a big update from the Reserve Bank of India (RBI). This project is meant to help the member countries of the South Asian Association for Regional Cooperation (SAARC) stay financially stable. The Reserve Bank of India’s decision is part of ongoing attempts to improve financial cooperation in the SAARC region. Exchange rates and currency swaps are financial tools that help countries handle foreign exchange and liquidity problems well, keeping the world’s economies stable.
New Additions to the Framework
One important change in the new system is the addition of a separate Indian Rupee (INR) Swap Window. This new window has a total sum of ₹250 billion and is meant to make swaps in Indian Rupee easier. India wants to make it easier for people in the area to use the Indian Rupee (INR).
Dollar and Euro Swap Provisions
Along with the INR Swap Window, the RBI still has a separate swap option for US Dollars and Euros, with a total of $2 billion in assets. Offering a range of currencies makes it easier to help more people with different needs and gives SAARC countries access to major currencies.
Operational Mechanism
With this plan in place, RBI will make straight swap deals with the central banks of the SAARC countries. The swap lines can’t work without these deals, which spell out the rules for exchanging currencies and getting financial help.
SAARC Currency Swap Facility Origins and Goals
When it opened in November 2012, the SAARC currency swap facility was meant to be a safety net for countries facing short-term problems with their foreign exchange and balance of payments until more permanent answers can be found. This building shows how SAARC countries can work together to keep their economies stable and cooperative.
Eligibility and Access
To use the currency swap facility, SAARC member countries must make bilateral swap deals with the RBI. This makes sure that all the countries that are taking part have decided on the terms of support, which are in line with their own and the group’s economic goals.
Month: Current Affairs - June, 2024
Category: Economy & Banking Current Affairs