A Dutch pension fund will have all its liabilities (future payments to pensioners) in Euros, but they typically invest a lot of the current pension contribution

A Dutch pension fund will have all its liabilities (future payments to pensioners) in Euros, but they typically invest a lot of the current pension contributions in USD stocks and bonds. This exposes them to exchange rate risk (uncertainty about the USD-EUR rate in the future, when they need to pay pensioners in Euros but their investments are in US dollars), on top of the normal investment risk of USD stocks and bonds. By simultaneously entering a EUR-USD swap (where they agree now with the counterparty at what rate they'll exchange USD back to EUR in the future), they can hedge the exchange rate part of the risk. This is at least how FX swaps are supposed to be used: to reduce exchange rate risk. It could also be used for pure speculation by entering the swap in opposite direction (so the USD profits or losses get amplified in Euro terms). We don't know which. It might be in the 90-page BIS report, but (without reading) I'm guessing that the BIS researchers didn't manage to find out either.