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Bank positions in FX swaps: insights from CLS

Author

Listed:
  • Pēteris Kloks
  • Patrick McGuire
  • Angelo Ranaldo
  • Vladyslav Sushko

Abstract

A combination of CLS data with BIS statistics shows banks' FX swaps positions alongside the currency mismatches on their balance sheets. It sheds light on global dollar flows via FX swaps in key currency pairs and, specifically, on banks' use of these instruments to hedge exchange rate risk, engage in arbitrage or serve customers. Compared with Japanese and euro area banks, US banks have played an outsize role in FX swap markets by using maturity transformation to intermediate in the interbank market and between banks and non-banks.

Suggested Citation

  • Pēteris Kloks & Patrick McGuire & Angelo Ranaldo & Vladyslav Sushko, 2023. "Bank positions in FX swaps: insights from CLS," BIS Quarterly Review, Bank for International Settlements, September.
    • Handle: RePEc:bis:bisqtr:2309b
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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