To prevent an excessive oversupply of Koruna, the central bank can "sterilize" these interventions. In the Czech context, the CNB used FX swaps to manage the liquidity surplus.
A Czech exporter has a CZK 100M loan at 3M PRIBOR + 1.5% and wants to fix their interest cost.
Using a restricted parameter approach prevents abrupt, unnatural shifts in daily estimations, allowing market makers to maintain consistent pricing for long-dated CZK swaps. Post-Crisis Multi-Curve Framework
A standard is an over-the-counter (OTC) derivative contract where two parties exchange cash flows based on a specified notional principal amount.