Central bank liquidity swap is a type of currency swap used by a country's central bank to provide liquidity of its currency to another country's central bank.[1][2] In a liquidity swap, the lending central bank uses its currency to buy the currency of another borrowing central bank at the market exchange rate, and agrees to sell the borrower's currency back at a rate that reflects the interest accrued on the loan. The borrower's currency serves as collateral.