China Signs 3.5Bln-Yuan Bilateral Currency Swap Agreement with Iceland

<?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />China's central bank has signed a bilateral currency swap agreement totaling 3.5 billion yuan with the Central Bank of Iceland on June 9.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

The agreement will run for three year, after which it can be renews if both sides agree, said governor of Iceland's central bank Mar Gudmundsson.

"The agreement is in a way symbolic," he said, "It can be the beginning of greater cooperation between the countries and the central banks. Also, it can facilitate greater trade between the countries."

Iceland's economic minister Gylfi Magnusson Magnússon said the move signaled China's trust on Iceland.

The country had been repeatedly excluded from similar currency swap deals between the United Federal Reserves and northern European countries such as Denmark and Norway in 2008, when the country's banks collapsed.

China has previously signed bilateral currency swap agreements with the Republic of Korea (ROK), Hong Kong, Malaysia, Belarus, Indonesia and Argentina.