The FX Hedging Facility is a customizable currency hedging product comprised of a foreign exchange (FX) hedging facility backed by an FX tail risk guarantee. The mechanism targets a particular tranche of FX risk and allows allocation of risks to suitable parties, and also eliminates the credit risk premium otherwise charged in a commercial currency swap. This product has the potential to reduce the hedging cost by ~30% while mobilizing a minimum of $9 of foreign capital per dollar of subsidy with more than 50% probability that the entire subsidy will be recovered.