Study On The Interest Rate Swap And Its Application In China

Interest rate swap is one of the most important financial innovation instruments within the swap category. Interest rate swap is widely applied to minimize the risk of interest, to save the cost of financing and to enhance the management of asset and liability. Since the emergence of Interest rate, its volume and participant increases unceasingly, the interest rate swap transaction has already become one of the essential tools in financing and risk management on the international money market.On February 9th, 2006, for enrich the risk management tools on the bond market and speed up the process of interest rate marketability, The People's Bank of China announced that, the central bank has permitted the RMB interest rate swap transaction experiment site. The same day, China Development bank and China Everbright Bank has completed the first RMB interest rate swap transaction, this symbolized that the RMB interest rate swap tool has been came into being officially in Chinese monetary market. It can be said that, the interest rate swap transaction is one of the most significant financial innovation tools in our country's monetary market until now. From now on, the interest rate swap transaction will be more and more. Therefore, it will be critical to have a good knowledge of interest rate swap, to have a mature interest rate swap market and professional traders, to have reasonable models for risk management.This article is a superficial research of the interest rate swap in this special time, the full text is divided into four parts:The first chapter introduces the background of the choice for the thesis and the research significance, and then introduced the concept and development of the financial swap, finally showed the research technique and the primary coverage of this article.The Second chapter elaborates the concept of interest rate swap and its theory basis—comparative advantage theory, the pricing of interest rate swaps, and also sums its basic functions.The Third chapter explores the risks of interest rate swap, including the category and the causes of risks, the measuring of risks, the ways of keeping away and control risks.The fourth chapter is the core of this article. It carries a thorough discussion of the realistic significance and profound influence which caused to the Chinese monetary market of the interest rate swap. The article believes that the interest rate swap will provide a effective way of financing for Our Enterprise, speeds up the development of our commercial banks, meets the demand of interest rate swap on bond market, has positive influence to our interest rate reform. Secondly, this chapter discussed the restriction factor and the countermeasure of interest rate swap from the aspects of money market interest rate index, the fluidity and the market access.