In its quarterly report published on Monday, December 5, 2022, the Bank for International Settlements (BIS), considered to be the central bank of central banks, carried out an in-depth analysis of the currency market survey it conducts every three years. She was particularly worried about the growth of off-balance sheet commitments and warns against hidden debt.

Published last October, the triennial survey by the BRI, an institution based in Basel, Switzerland, again highlighted the predominance of the US dollar in this vast market. Indeed, the equivalent of 7.5 trillion dollars was traded per day on average in April on the foreign exchange market, with the dollar appearing in 88% of transactions. Thus, it went further with the analysis in its quarterly report and detected the possible risks to the stability of the financial system.

The BIS highlighted the risk of settlement such as the risk that one of the counterparties makes a payment but does not receive the currency purchased in exchange. According to its data, $2200 billion in foreign exchange transactions are potentially exposed to settlement risk per day. “There is [...] a gigantic volume of off-balance sheet dollar debt that is partially hidden,” said the head of the monetary and economic department of the BIS, Claudio Borio, recalling that this investigation has helped “uncover certain parts of the global financial markets that would otherwise go unnoticed.”

Please note that the purpose of this currency survey is to help central banks and market participants monitor changes in trading patterns and market structures in order to identify risks that deserve special attention.