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The blazon can be found on the Basel town hall

It depicts two war axes that are crossed. The other flags depict banners of states of Switzerland, the one to the right is Wallis.

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More pictures of the town hall

Wikimedia
Tomas Travel
Handelszeitung

It does not seem to depict a blazon of one of the Swiss cantons/states, as the banner cannot be found in the table of states (de)

What does, or did, it represent?

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    Each Swiss town also has a symbol, as well as some families. I have a sticker for the town of Kallnach, which is in the Canton of Bern; I visited a few years ago to see where my grandmother's family came from. – Peter Diehr Jun 28 at 16:09
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That's Biel / Bienne, see its coat of arms:

Biel / Bienne Coat of Arms

By Aliman5040 - Own work, CC BY-SA 3.0, Link

Swiss historian Markus Kutter confirms it in Zwischen Jura, Vogesen und Schwarzwald, 32. Hinter die Fassade verbannt (in German):

Auf der ursprünglichen Fassade waren nur 11 Wappen abgebildet, also die achte alten Orte, ergänzt durch Freiburg und Solothurn, dazu Basel. Beim ersten Umbau des Rathauses von 1606 bis 1611 kamen Biel, Wallis, Graubünden, St. Gallen, Appenzell und Schaffhausen dazu.

Bienne's coat of arms was added between 1606 and 1611 (the article is about why Mulhouse is at the back).

More explanation, gleaned from Kutter:

The coats of arms consist of the Swiss cities (first 8, then 11) and its associates Biel, Wallis, Graubünden and St. Gallen. Here's an overview of the growth of the Old Swiss Confederacy. You can also see other associates, above mentioned Mulhouse and Rottweil.

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