• Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 8/6/2014

Switzerland - Currency swap agreement with China, enhances treaty agreements  

August 6: Representatives of the Swiss National Bank and the People’s Bank of China in July 2014 signed a bilateral swap agreement, to enable renminbi and Swiss francs to be purchased and repurchased between the two central banks, up to a limit of 150 billion renminbi, or CHF 21 billion.

This swap agreement is intended to allow liquidity in renminbi and Swiss francs to be made available to the relevant markets, as required.

KPMG observation

The swap agreement is a key prerequisite for the development of a renminbi market in Switzerland, and is a step towards a renminbi trading hub in Switzerland.

Switzerland is a leading global center for private wealth management and could become a top location for Chinese banks wishing to expand into this field.

Tax professionals have observed that the swap agreement—together with the Switzerland-China free trade agreement, which entered into force on 1 July 2014 and the new income tax treaty between Hong Kong and Switzerland that entered into force in October 2012—positions Switzerland as a top headquarter location for Chinese and Hong Kong companies seeking a gateway to Europe.

Read a July 2014 blog posting prepared by the KPMG member firm in Switzerland: Switzerland and China agreed on renminbi swap agreement

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