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Can bilateral RMB swap reduce monetary policy spillovers from the United States to China?

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  • Zhang, Mi
  • Sensoy, Ahmet
  • Nguyen, Duc Khuong
  • Cheng, Feiyang

Abstract

This study analyzes the impact of bilateral RMB swap agreements on the transmission of US monetary policy to China, while focusing on the underlying mechanisms and potential heterogeneous effects. Our findings demonstrate that these agreements significantly attenuate US monetary policy spillovers to China. Mechanistically, we show that bilateral swaps promote Chinese exports to trading partner countries, thereby mitigating the negative consequences of US monetary policy. Notably, agreements with emerging economies exhibit a stronger mitigating effect than those with advanced economies. These results offer policymakers valuable insights for managing international monetary policy spillovers.

Suggested Citation

  • Zhang, Mi & Sensoy, Ahmet & Nguyen, Duc Khuong & Cheng, Feiyang, 2025. "Can bilateral RMB swap reduce monetary policy spillovers from the United States to China?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 101(C).
    • Handle: RePEc:eee:intfin:v:101:y:2025:i:c:s1042443125000472
    DOI: 10.1016/j.intfin.2025.102157
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    Keywords

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    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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