Jiao Yang:Central Bank Swap Lines, Bank Risk Management and Currency Internationalizaiton in Trade


Time:2023. 12. 21(Thursday)10:30-12: 00

Venue:Building 2, Room 220, Songjiang Campus

Speaker:School of Oceanwide International Finance, Fudan University, Assistant Professor Jiao Yang

Host:Associate Professor Liu Chunbo


This paper investigates the role of central-bank local currency swap lines in promoting the use of local currencies in trade invoicing. We emphasize the role of swap lines in banks' currency risk management. Using exporter-trading partner-year level data on currency invoicing from South Korea during 2006-2019, we show that signing swap lines between Korea and China likely played a role in the rise of the RMB in the invoicing share among Korean exporters. Korean exporters whose main banks had more ex-ante exposure to China exhibited greater increase in RMB invoicing. Our theory suggests that the financial safety net provided by the swap line incentivizes banks to provide higher interest rates for deposits in the partner's currency, and hence promotes the use of the same currency in trade invoicing.


Jiao Yang is an assistant professor of finance at the School of Oceanwide International Finance at Fudan University. His main research areas include international finance, macroeconomics, and trade. Professor Jiao Yang obtained a Ph.D. in Economics from Columbia University in 2018, and a Master's degree in Finance and a Bachelor's degree in Mathematical Physics from Tsinghua University in 2012 and 2010. His research on the trade friction between China and the United States was published in the Review of Economics and Statistics and won the 2022 Urayama World Economic Paper Award (ministerial level award). He has received teaching awards at Columbia University and Fudan Oceanwide International Finance School, respectively.

550 Dalian Road (W), Shanghai 200083, China
1550 Wenxiang Road, Shanghai 201620, China