Advantages and disadvantages of swap contracts

Subject Areas : Journal of Law and Politics

Mokhtar Mahmoudi ¹ , Ebrahim Shoarian ² , Yousef Molaee ³

1 - PhD Student in Private Law, Department of Law, Urmia Branch, Islamic Azad University, Urmia, Iran. [e-mail]
2 - Professor of Law, Urmia Branch, Islamic Azad University, Urmia, Iran & Professor of Law, University of Tabriz, Tabriz, Iran. [e-mail]
3 - Assistant Professor of Law, Urmia Branch, Islamic Azad University, Urmia, Iran. (Corresponding Author(: [e-mail]

Received: 2021-10-19 Accepted : 2021-11-25 Published : 2021-12-22

Keywords: Economic Development, risk management, Advantages and Disadvantages, Swap Contract, International Trade,

Abstract :

AbstractSwap as one of the new methods of international trade can have a great impact on solving the country's economic problems. This contract has become widespread in the field of international trade. But no research has been done on its advantages and disadvantages in Iran. The present article examines the issue using library resources and answers the question: What are the benefits of swap contracts? And what effect can it have on the country's economic development? It concludes that the swap can prevent the negative impact of price changes on the value of assets and cover the risk of commodity, currency and interest rate fluctuations. Swaps reduce the cost and time of moving goods and currency, and boost the country's transportation, eliminating intermediary currency and using the national currency, and making sanctions ineffective. So the swap has a very positive effect on economic development, but there are also criticisms of it, which is that this contract increases crude sales and reduces domestic production and the value of the national currency. But the important point is that in addition to economic benefits, swaps have significant benefits in political convergence. Communicating with countries around the world through swaps provides political and security benefits, as well as access to the consumer markets for the sale of Iranian goods.