Post by Bank for International Settlements – BIS

Foreign exchange (FX) 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. Roughly $5 trillion, or 36%, of the April 2025 average daily settlement used payment-versus-payment, which eliminates settlement risk. A further $7.6 trillion, or 54%, used methods such as pre-settlement netting that mitigate but do not eliminate settlement risk. More than $1.4 trillion, or 10%, were settled gross bilaterally, which fully exposes trades to settlement risk. Public and private sector stakeholders should continue their efforts to reduce FX settlement risk for a broader range of currencies and market participants. Explore the full analysis in the latest BIS Quarterly Review: https://bit.ly/4erfl8e #BISQuarterly #BISStatistics