BIS Triennial Survey 2001

9 October 2001

Frankfurt am Main, 9 October 2001

The Triennial Central Bank Survey, conducted in April 2001 by 48 central banks and monetary authorities and co-ordinated by the Bank for International Settlements (BIS), is the first comprehensive assessment of foreign exchange and derivatives market activity since the introduction of the euro in 1999. The preliminary overall statistics, which have been published today by the BIS, provide information on the use of the euro in foreign exchange and derivatives markets, as compared with other major internationally traded currencies and the euro legacy currencies. The final overall findings of the survey will be published in early 2002.

The introduction of the euro on 1 January 1999, by eliminating intra-euro area foreign exchange and derivatives trading, was a significant factor behind the sizeable decline in the global foreign exchange market activity recorded in 2001, as compared with 1998. Two other factors also played a role: the growing use of electronic broking and the consolidation of the banking industry.

Based on preliminary data, the average daily turnover in traditional foreign exchange instruments (i.e. spot transactions, outright forwards and foreign exchange swaps) traded by counterparties in the euro area was estimated at USD 219 billion, representing 13.5% of overall market volume in net terms (i.e. net of double-counting of transactions with reporting dealers within the euro area). This share compares with 31.1% for counterparties in the United Kingdom, 15.5% for counterparties in the United States and 9.1% for counterparties in Japan.

The euro was the second most widely traded currency in April 2001, behind the US dollar and ahead of the Japanese yen, entering on one side of 38% of "net-net" (i.e. adjusted for both local and cross-border double-counting) foreign exchange transactions. This represents a decrease of 14 percentage points compared with the aggregate share of its legacy currencies in April 1998 (52%). This decrease is mainly attributable to the elimination of intra-euro area foreign exchange trading, which resulted mechanically from the introduction of the euro. Indeed, in 1998, intra-euro area transactions amounted to approximately 10% of net global foreign exchange market turnover. The euro was predominantly traded against the US dollar, while the cumulative market share of other currency pairs involving the euro remained small, reflecting the fact that the US dollar was still the main vehicle currency in the foreign exchange markets.

Over-the-counter (OTC) derivatives turnover, which includes foreign exchange contracts, such as currency swaps and options, and interest rate instruments, increased significantly in 2001 compared with 1998, and deals of euro area counterparties amounted to USD 240 billion, accounting for more than 31% of the total reported OTC derivatives turnover. This share is to be compared with 35.8% for counterparties in the United Kingdom, 17.5% for counterparties in the United States and 2.8% for counterparties in Japan. The decline observed in traditional foreign exchange market activity was also reflected in OTC foreign exchange derivatives activity. Compared with the aggregate turnover of its legacy currencies in April 1998, total daily foreign exchange derivatives turnover in euro fell by 29%, in line with the general trend.

By contrast, trading in OTC interest rate derivatives increased significantly in 2001 compared with previous surveys. The euro accounted for the largest share of global daily turnover (47%). This proportion is very similar to the aggregate market share of the euro legacy currencies in 1998. The considerable growth in the turnover of interest rate instruments resulted from a strong increase in swaps and forward rate agreements (FRAs). Transactions in euro have been fostered by the creation of a large, liquid and integrated money market in the euro area (e.g. swap and FRA transactions increased by 104% and 85%, respectively, between April 1998 and April 2001). Likewise, trading in interest rate options, while declining overall, rose by 9% for euro-denominated transactions as compared with turnover in euro legacy currencies in 1998.

The BIS is today publishing preliminary global results (the BIS press release is available at, while the national central banks of the Eurosystem are releasing their own national results simultaneously.

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