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

Matthew Conway, Mathias Drehmann, Natalie Lovell, Patrick McGuire and Takeshi Shirakami

BIS Quarterly Review, 2026

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.

JEL-codes: E42 F31 G15 (search for similar items in EconPapers)
Date: 2026
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