Swaps, used consistently and systematically, can provide various benefits for borrowers and lenders. These include: Hedging risks is one of the more critical benefits of interest rate swaps. If a business has long-term exposure to a volatile interest rate, it can use interest rate swaps to mitigate that risk. Companies with exposure to currency risks can hedge similarly by using currency swaps. Lower cost borrowing since the parties each possesses a comparative advantage which they exchange with one another, allowing each to get needed funds at a lower rate. Access to new financial markets is provided to each party through the comparative advantage given by the other party. This permits each party to find the best possible source for its funds. Businesses with significant asset-liability mismatches can use swaps to manage those mismatches. The interest rates between the two instruments will provide matching payment flows and control the long-term risk of the mismatch in interest rates.