Chinese yuan Photo:VCG

China and Serbia have more than tripled the size of their bilateral local-currency swap arrangement, a move that analysts said will provide stronger financial support for expanding trade, investment and local-currency settlement between the two countries amid growing momentum in bilateral economic cooperation.

The People's Bank of China (PBC) and the National Bank of Serbia (NBS) recently renewed their bilateral local-currency swap agreement, expanding the swap size from 1.5 billion yuan ($221 million), or 27 billion Serbian dinars to 5 billion yuan, or 74 billion Serbian dinars, the PBC said in an official statement on Thursday.

The agreement will be valid for five years and may be extended upon mutual consent, according to the Chinese central bank.

The renewed and expanded bilateral local-currency swap arrangement will help further deepen monetary and financial cooperation between the two countries, facilitate bilateral trade and investment, and safeguard financial market stability, the PBC said.

The announcement of the renewal came during Serbian President Aleksandar Vucic's state visit to China from Sunday to Thursday, when the two sides agreed to further deepen practical cooperation and signed more than 20 documents in the areas of political relations, economy and trade, science and technology, education, legal affairs and culture, according to China's Foreign Ministry. 

In a joint statement released during the visit, the two sides agreed to strengthen financial cooperation, renew the bilateral local-currency swap agreement, and encourage financial institutions in both countries to use yuan swap funds to support trade and investment activities by enterprises.

A currency swap deal allows two institutions to exchange payments in one currency for equivalent amounts in the other to facilitate bilateral trade settlements and provide liquidity support to financial markets.

The substantial expansion of the bilateral local-currency swap arrangement reflects deepening cooperation and rising demand from companies on both sides for local-currency settlement, financing support and risk-management tools, Bian Yongzu, a financial expert and executive deputy editor-in-chief of Modernization of Management magazine, told the Global Times on Thursday.

The swap line can provide companies on both sides with more convenient local-currency settlement channels, reduce reliance on third-party currencies, lower exchange, transaction and time costs, and help enterprises mitigate foreign-exchange volatility risks to some extent, Bian said.

The bilateral mechanism dates back to 2016, when the PBC and the NBS agreed on a 1.5 billion yuan/27 billion Serbian dinar swap line. The NBS said in a statement at the time that it was the first arrangement of its kind between the Serbian central bank and another central bank.

The latest renewal builds on steps to improve local-currency settlement between the two countries. In December 2023, the PBC designated Bank of China's Serbia subsidiary as the yuan clearing bank in Serbia and authorized it to enter China's domestic interbank foreign exchange market for yuan/dinar transactions, according to the PBC.

In March 2025, Bank of China said that it had listed yuan-Serbian dinar exchange rates, becoming the first financial institution globally to offer Serbian dinar foreign-exchange settlement services and formally establishing a direct exchange channel between the two currencies.

Financial cooperation is often built on large-scale, high-frequency trade and investment ties, and a larger currency swap arrangement can deliver clear benefits only when bilateral business cooperation has reached a certain level, according to Bian.

China-Serbia trade reached $9.37 billion in 2025, up 25.6 percent year-on-year, according to Serbia's national statistics office, as cited by China's Ministry of Commerce. China's exports to Serbia rose 30.9 percent, while imports from Serbia increased 7.7 percent.

Bilateral trade and institutional economic arrangements have continued to deepen. The China-Serbia Free Trade Agreement took effect on July 1, 2024, under which the two sides will gradually eliminate tariffs on 90 percent of their respective tariff lines and adopt a series of trade facilitation measures, according to China's Ministry of Commerce.

The expansion shows that China-Serbia cooperation has moved beyond trade growth alone and is increasingly being supported by stronger financial infrastructure, Bian said. As the two countries deepen trade, investment and industrial cooperation, a larger swap line will help reduce transaction costs, improve settlement efficiency and give enterprises greater confidence to expand cross-border business, he said.