Whenever the SBP invites bids from banks to purchase yuan against the rupee out of the yuan-rupee swap fund
available with both country's central banks, banks can purchase yuan according to their needs and resell the same to their clients to settle imports from China.
It would also set up a joint $100-billion emergency swap fund
for financial crises.
He told the forum on Thursday that a 120 billion dollar currency swap fund
to be launched by East Asian economies in March could be developed to become an Asian Monetary Fund, adding it could be "supplementary" to the IMF and not replace it.
The initial amount of the multilateral currency swap fund
will be US$120 billion.
The change to the definition of an investment company in the 1997 Act was intended to prevent the growth of "swap fund" transactions, in which a taxpayer transferred appreciated (but non-marketable) stock or securities to a partnership that held cash or other liquid assets.
Of particular concern to Congress was the reappearance of so-called swap funds, which are partnerships or RICs that are structured to fall outside the definition of an investment company, thereby allowing contributors to make tax-free contributions of stock and securities in exchange for an interest in an entity that holds similar assets.
The apex bank said that the window would allow it to swap funds
mobilised through foreign currency deposits to attract overseas funds.
Thereafter, the swap funds
were considerably less expensive than privatemarket funds during the height of the crisis as the spread between Libor and OIS widened dramatically.
The Senate Report to the Act explained that Congress intended to prevent the nontaxable formation of "swap funds
" in which an RIC was established under Sec.