China adapting Fed swaps as power tool

London

JUST like television, iPhone and American flags, central-bank international currency swaps are a US creation now made in China though only the swaps serve as a US$500 billion state tool of economic and geopolitical power.

The Federal Reserve began foreign-exchange swap lines with allies including the then West Germany at the peak of the Cold War in 1962 to defend against losses from gold reserves, and in 2007 revived the programme to fight the financial crisis.

While the Fed's pr…