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Uncovering FX settlement risk: new measures from the 2025 BIS Triennial Survey

Author

Listed:
  • Matthew Conway
  • Mathias Drehmann
  • Natalie Lovell
  • Patrick McGuire
  • Takeshi Shirakami

Abstract

Foreign exchange settlement risk is the risk that one party to a currency trade fails to deliver the currency owed. It can result in significant losses and undermine financial stability. To shed light on the scale of trades most at risk, the April 2025 Triennial Survey categorised settlement amounts by settlement method. Just over $5 trillion, or 36% of the average daily settlement during the month, settled via payment versus payment (PvP), which eliminates FX settlement risk. A further $7.6 trillion (54%) involved settlement methods such as pre-settlement netting that mitigate but do not eliminate settlement risk. More than $1.4 trillion (10%) were settled on a gross bilateral basis, which is fully exposed to settlement risk.

Suggested Citation

  • Matthew Conway & Mathias Drehmann & Natalie Lovell & Patrick McGuire & Takeshi Shirakami, 2026. "Uncovering FX settlement risk: new measures from the 2025 BIS Triennial Survey," BIS Quarterly Review, Bank for International Settlements, June.
    • Handle: RePEc:bis:bisqtr:2606c
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    References listed on IDEAS

    as
    1. Wenqian Huang & Ingomar Krohn & Vladyslav Sushko, 2025. "Global FX markets when hedging takes centre stage," BIS Quarterly Review, Bank for International Settlements, December.
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    More about this item

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Systems; Standards; Regimes; Government and the Monetary System
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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