Foreign exchange derivatives may be hiding as much as $14 trillion in debt


MarketWatch/Anneken Tappe/09-18-17

An accepted accounting practice is allowing around $13 trillion to 14 trillion of debt to be hidden from global corporate balance sheets, exceeding the roughly $10.7 trillion of declared debt, according to analysts from the Bank for International Settlements.

The culprit? Foreign exchange swaps and forwards, analysts Claudio Borio, Robert McCauley and Patrick McGuire said. These instruments allow money to be borrowed without treating it as debt on corporate balance sheets, muddling the picture of how worldwide obligations.

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