If there is an exchange of notional principle in a currency swap, is there current credit risk - or is it potential credit risk?
current credit risk is only when the payment is due, so not that much of that risk in currency swap potential credit risk is more distant - in currency swap potential credit risk is from the middle of the contract tenure to the end because there is a risk that the counterparty won’t give the currency back (since they exchanged the currencies at the beginning)
there can be exchange of principal, but doesn’t have to be (they can do like a hypothetical exchange of principal)…