Glossary

Swap

A swap is an agreement to exchange assets at agreed prices at a specified future date. Currency swaps and interest rate swaps are amongst the most common forms. 

Currency swaps are a mechanism to exchange debt denominated in different currencies. Interest rate swaps, meanwhile, allow for the exchange of different types of debt. Most simply, they are contracts to exchange debt with a fixed interest rate for debt with a floating (variable) rate. There are also several more complex forms of swap, most notably credit default swaps.

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