Cezch Swap

One of the most significant periods in modern Czech monetary history was the implementation of the exchange rate floor (November 2013 to April 2017). During this period, the CNB committed to keeping the CZK/EUR exchange rate weaker than 27.00. To achieve this, the central bank engaged in massive foreign exchange interventions. A critical but often overlooked aspect of these operations was the use of to manage the liquidity impact of these interventions, a mechanism that market participants often referred to as the core of the CNB's operational toolkit.

Constructed using the CZK OIS (Overnight Index Swap) curve. This factors in overnight liquidity, reducing credit risk premiums embedded within longer-term forward calculations. Cross-Currency Swaps involving CZK cezch swap

The legacy of the Czech swap operations remains relevant today as the Czech economy faces high inflation. The CNB has recently utilized intervention to the currency (selling reserves to buy Koruna) to combat imported inflation—a reversal of the traditional Czech model. This demonstrates the versatility of swap and spot operations in the central bank's arsenal. One of the most significant periods in modern

A company with a CZK floating-rate loan (e.g., PRIBOR + 1%) can enter a payer swap (pay fixed, receive floating) to convert it to a fixed-rate liability. A critical but often overlooked aspect of these

While direct spot market intervention (buying Euros with freshly minted Koruna) was the primary tool for setting the floor, the CNB utilized foreign exchange (FX) swaps to manage the side effects.