Bilateral agreements between central banks,which provide for an exchange of currencies to help finance temporary balance-of-payments disequilibriums,are referred to as:

Question

Quizplus · Accepted Answer

Bilateral agreements between central banks that allow for an exchange of currencies to address temporary balance-of-payments issues are known as swap agreements. A swap agreement is an arrangement between two parties to exchange financial instruments or cash flows at a predetermined point in the future. In this case, the central banks are exchanging currencies to maintain stability in foreign exchange markets. IMF drawings refer to loans provided to member countries by the International Monetary Fund. Special drawing rights are a reserve asset created by the IMF to supplement member countries' official reserves. The buffer stock facility is a commodity management tool that aims to stabilize the prices of commodities by buying and selling them on the market.

Bilateral Agreements Between Central Banks,which Provide for an Exchange of Currencies