The term 'swaps' is a financial instrument that involves two parties exchanging cash flows or other financial instruments. It is a type of derivative, meaning it derives its value from an underlying asset. Swaps are used to hedge risk, manage exposure to certain assets, and speculate on the future direction of markets. They can be used to transfer risk from one party to another, and can also be used to speculate on the direction of interest rates, foreign exchange rates, and commodity prices.