Yes sorry I was going to do that as an edit after I had a chance to read other comments. First, the article meanders through a lot of unrelated stuff like cryp

Yes sorry I was going to do that as an edit after I had a chance to read other comments. First, the article meanders through a lot of unrelated stuff like crypto markets and interest rates and inflation. These add nothing to the subject, please do not be confused by it. Second, what’s being quoted is a notional on a swap, which is the reference amount being indexed on in the contract. Some background: There are different types of swaps, some of which have been standardized via ISDA agreements, or are being cleared on an exchange or other multiparty platform that provides some standardization and doesn’t require a “bilateral” contract that’s between two counter parties, often paired by a securities market maker - but historically they’re “over the counter” and bilateral in that there’s no market or exchange, it’s just an agreement. I’m that agreement or contract there’s a reference currency pair in the case of fx swaps. Say it’s USD/EUR - I.e., the exchange rate between USD and Euros. The notional is the amount of that indexed pair. They’re are often enormous amounts. Much more money than either actually have on hand. But, they’re often used against things like non repatriated earnings - which can be enormous. Those earnings are never involved in the contract mind you, but are instead referenced as the notional. The two counter parties in the contract agree to swap a risk in a swap. Typically they can be conceived of the seller gives the buyer currency at the current exchange rate. The buyer simultaneously issues forward contracts to the seller. The difference between the two is the swap point. This swap point is where profit and losses lie, and it’s a very small percentage of the notional. I’m not as familiar with OTC swaps in FX, but typically there’s no need to actually swap assets but rather agree to pay the PNL without owning the underlying assets. What’s at risk is the payouts, which are no where near the notional value of the swap. The article however implies notional values are somehow debt owed. They further imply that they’re “hidden,” but generally bilateral contracts aren’t disclosed securities by many participants in the market. The real ask is embedded deep in the article which is BIS wants to see more of these transactions settled via a standardized clearing house or exchange that usually have reporting requirements. The BIS is worried this returns us to some of the opacity before the financial crisis. As someone who worked many years as a quant in the space of credit default swaps, which has largely standardized to my understanding, I do not agree. OTC has its place and cleared has its place. Some markets don’t have a successful place to clear in the open. But it’s not hiding anything, and it’s absolutely not hiding debt, nor are these instruments dangerous.