An interest rate swap (IRS) is a risk insurance instrument where two parties exchange payments at a fixed and floating rate.
The parties agree in advance that at a certain point in time one party will make a payment to the other in the amount of a specified fixed percentage – the swap rate. At that point, the second party will pay the accrued interest to the first at some floating (depending on the agreement) rate.
In this case, there is an amount on which a fixed or floating interest is charged, but it appears conditionally. It can be any, the exchange of this amount does not occur. Upon payment of interest, offset occurs, and the party whose payment is greater makes the payment. Its amount is the difference between the amount of accrued interest.
The interest rate swap is a highly liquid market instrument and is used to insure transactions against losses.