[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-0-en-105":3,"doc-seo-322704-105":59,"doc-detail-322704-en":131},{"code":4,"msg":5,"data":6},0,"success",[7,13,18,23,28,33,38,43,48,51,55],{"id":8,"doc_module":4,"doc_module_name":9,"category_name":10,"show_sort_weight":11,"slug":12},1,"Document","Story & Novel",90,"story-novel",{"id":14,"doc_module":4,"doc_module_name":9,"category_name":15,"show_sort_weight":16,"slug":17},2,"Literature",80,"literature",{"id":19,"doc_module":4,"doc_module_name":9,"category_name":20,"show_sort_weight":21,"slug":22},4,"Exam",70,"exam",{"id":24,"doc_module":4,"doc_module_name":9,"category_name":25,"show_sort_weight":26,"slug":27},5,"Comic",60,"comic",{"id":29,"doc_module":4,"doc_module_name":9,"category_name":30,"show_sort_weight":31,"slug":32},6,"Technology",50,"technology",{"id":34,"doc_module":4,"doc_module_name":9,"category_name":35,"show_sort_weight":36,"slug":37},7,"Healthcare",40,"healthcare",{"id":39,"doc_module":4,"doc_module_name":9,"category_name":40,"show_sort_weight":41,"slug":42},8,"Research & Report",30,"research-report",{"id":44,"doc_module":4,"doc_module_name":9,"category_name":45,"show_sort_weight":46,"slug":47},9,"Religion & Spirituality",20,"religion-spirituality",{"id":46,"doc_module":4,"doc_module_name":9,"category_name":49,"show_sort_weight":46,"slug":50},"World Cup","world-cup",{"id":52,"doc_module":4,"doc_module_name":9,"category_name":53,"show_sort_weight":52,"slug":54},10,"Lifestyle","lifestyle",{"id":56,"doc_module":4,"doc_module_name":9,"category_name":57,"show_sort_weight":24,"slug":58},19,"General","general",{"code":4,"msg":60,"data":61},"ok",{"site_id":62,"language":63,"slug":64,"title":65,"keywords":66,"description":67,"schema_data":68,"social_meta":124,"head_meta":126,"extra_data":128,"updated_unix":130},105,"en","swapsan-overview-an-economic-commentary","Swaps—An Overview - An Economic Commentary","","Interest rate swaps are widely watched financial derivatives whose swap rates are increasingly used as benchmarks and as indicators of macroeconomic risk. The commentary explains what swaps are, how fixed and floating payment streams are exchanged on a notional amount, and how netting and the non-exchange of principal reduce credit risk relative to bonds. It also describes major swap types and why LIBOR is an important reference rate for swap pricing.",{"@graph":69,"@context":123},[70,84,106],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/swapsan-overview-an-economic-commentary/322704/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/swapsan-overview-an-economic-commentary/322704.png","ImageObject",300,407,{"name":92,"@type":93},"Theodore","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-10-30","2026-09-21",true,{"@type":102,"interactionType":103,"userInteractionCount":105},"InteractionCounter",{"@type":104},"ViewAction",12,{"@type":107,"mainEntity":108},"FAQPage",[109,115,119],{"name":110,"@type":111,"acceptedAnswer":112},"What does a fixed leg buyer and floating leg seller mean in an interest rate swap?","Question",{"text":113,"@type":114},"In a swap, the party paying the fixed rate is the buyer and is described as “long the swap,” while the party paying the floating rate is the seller and is described as “short the swap,” reflecting market convention rather than strict contractual identity.","Answer",{"name":116,"@type":111,"acceptedAnswer":117},"How do notional amounts work in swaps, and why does that matter for risk?",{"text":118,"@type":114},"Swap payments are based on the notional amount, but the notional principal is not exchanged. Because the notional amount is not at risk, a swap has less credit risk than a bond or loan with the same face value.",{"name":120,"@type":111,"acceptedAnswer":121},"Why are swap rates often linked to LIBOR?",{"text":122,"@type":114},"The floating rate most commonly used in the swaps market to reference a swap rate is LIBOR. This makes swaps derivatives on LIBOR, so changes in LIBOR characteristics directly affect swap rates and related interest-rate measures.","https://schema.org",{"og:url":83,"og:type":125,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":127,"canonical":83},"index,follow",{"doc_id":129,"site_id":62},322704,1790671309,{"code":4,"msg":5,"data":132},{"doc_id":129,"user_id":133,"nickname":92,"user_avatar":134,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":135,"file_id":136,"file_url":137,"file_type":138,"file_size":139,"view_count":105,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":24,"language":140,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":141,"faqs":142,"seo_title":143,"seo_description":67,"update_tm":144,"read_time":145,"preview_page_count":4},7971461740886,"https://ap-avatar.wpscdn.com/davatar_3d24733baf745e90a7e4bdd5f77d97b2","by Joseph G.Haubrich  \nA  \nsoon becomes acquainted with a varietyof interest rates—long rates,short rates,rates on government bonds,bankaccounts,and corporate bonds.Thosereaders may have recently noticed a newrate getting more attention in the finan-cia pages:swap rates.As the interestrate paid on an increasingly commonfinancial derivative—the interest rateswap—these rates deserve attention intheir own right.Spreads between swaprates and Treasury bonds are becoming aclosely watched indicator of the market'sview of macroeconomic risk.Further-more,some analysts view swaps as themost likely replacement for Treasurybonds as a financial benchmark,shouldbudget surpluses dry up the governmentbond market.They have alreadybecome the standard for pricing manycorporate bonds.  \nSwap rates,like bond and mortgagerates,can provide information aboutcurrent and future economic conditions.But swaps are not bonds or mortgagesso their interest rate measures somethinga bit different than the rates on thoseinstruments.Extracting informationabout the economy from swap ratesrequires understanding the differencesbetween them and other types of interestrates.This Economic Commentarydescribes the swaps market,exploresthe differences between swaps and otherinterest rates,and attempts to illustratesome of the information swap rates canprovide.  \n# ■ Swaps—An Overview\n\nUnlike derivatives such as CATS,DOGS or Quantoes,the name \"swap\"actually describes the instrument.'inaswap,the two parties exchange,or swap,payment streams.For example,supposeone firm has invested in a bond that paysa coupon of 5 percent each year,andanother firm has invested in a bond that  \n# Swaps and the Swaps Yield Curve\n\npays an adjustable,or floating rate eachyear.The two firms can enter a swapagreement and pay each other their inter-est streams.The firm paying the fixedrate (or \"fixed leg\")is called the buyerandis said to be\"long the swap.\"Thatpaying the floating rate is called theseller and is \"short the swap,\"thoughthese terms are really just a marketconvention.  \nJust why firms enter swaps agreementsis an open question.Swaps have grownexponentially since their introduction,so fims must perceive some value tothem.Researchers suggest several possi-bilities.²Swaps may help firms protecttheir cash flow from frequent changes ininterest rates on bank credit.They mayreduce a firm's overall financing costs,either by giving the firm the flexibilityto adjust the terms of its existing debtmaturities,cost,or whether it's fixed oradjustable—or by enabling firms toeffectively obtain lower credit-risk pre-miums from each other than they canfrom banks or by selling equity.  \nThere are different kinds of swaps,butthey have several common featuresFirst,the swap payments are all basedon what is called the notional amount.An annual coupon of 5 percent on anotional amount ofS1 billion wouldmean a payment of S50 million eachyear.Swaps are often measured by theirnotional value,and it is common to seecorporations reporting numbers such as“$2 billion notional value”or even reportssaying things like \"the total swapsmarket has become enormous,withnotionals exceeding S3 trillion.\"Notion-als are like the principal on a bond,withthe extremely important differencethat the notional amount never getsexchanged.Because the notional amountis not at risk—unlike a bond—aSI billion swap has less credit risk thana SI billion bond or loan.(One way to  \nDecember 2001  \nInterest rate swaps have become a pop-ular financial derivative,and marketwatchers and economists are payingcloser attention to them and their asso-ciated yield curves.This Commentarygives a brief introduction to swaps andtheir relation to other interest rates.  \nthink of this is that two bonds are beingswapped—a fixed bond for a floatingbond,and the principal amounts cancelout.)  \nIn asimilar fashion,to avoid redundantpayments,the two swap counterpartiesmake only net payments to each other.On that SI billion swap of a fixed5 percent for a six-month floati","cbCaifPhgDOVJ1kV","https://ap.wps.com/l/cbCaifPhgDOVJ1kV","pdf",1305218,"English","# Swaps—An Overview\n## The Importance of LIBOR","[{\"question\":\"What does a fixed leg buyer and floating leg seller mean in an interest rate swap?\",\"answer\":\"In a swap, the party paying the fixed rate is the buyer and is described as “long the swap,” while the party paying the floating rate is the seller and is described as “short the swap,” reflecting market convention rather than strict contractual identity.\"},{\"question\":\"How do notional amounts work in swaps, and why does that matter for risk?\",\"answer\":\"Swap payments are based on the notional amount, but the notional principal is not exchanged. Because the notional amount is not at risk, a swap has less credit risk than a bond or loan with the same face value.\"},{\"question\":\"Why are swap rates often linked to LIBOR?\",\"answer\":\"The floating rate most commonly used in the swaps market to reference a swap rate is LIBOR. This makes swaps derivatives on LIBOR, so changes in LIBOR characteristics directly affect swap rates and related interest-rate measures.\"}]","Swaps—An Overview - An Economic Commentary | PDF",1789963357,13]