People’s Bank of China and the European Central Bank (ECB) agreed this Thursday on a bilateral currency swap arrangement that allows both parties to purchase and repurchase Chinese yuan and euro from each other. The swap deal will be valid for three years, and it will have a maximum size of 350 billion Chinese yuan and 45 billion euro (60.9 billion US dollar). It is China’s second biggest swap line with a foreign central bank, the largest being a 360 billion yuan deal with South Korea. An ECB announcement states the swap agreement was established to meet the demands of increasing bilateral trade between Europe–especially Germany–and China, to act as a backstop for foreign-denominated funds in Europe, and to ensure the stability of financial markets. An economist from Royal Bank of Scotland in Hong Kong commented that the agreement emphasized the growing internationalization of the Chinese yuan. (European Central Bank, Financial Times, Reuters, Oct. 10, 2013)