An interest rate swap (IRS), subject to authorization by the BCT, is a contract through which Amen Bank and its client agree to exchange interest flows.
Broadly speaking, the two parties agree on the day of the signature of the contract on a lending interest rate and a borrowing interest rate, which, when applied to a hypothetical principal or nominal value, allows the determination of the amount of interest to be exchanged at each end of period.
In practice, only the net amount of the exchange of interest actually gives rise to a financial flow (receivable or payable).