The BANK FOR INTERNATIONAL SETTLEMENTS (BIS) is an international
financial institution owned by central banks which "fosters
international monetary and financial cooperation and serves as a bank
for central banks". The BIS carries out its work through its
meetings, programmes and through the
* 1 History
* 2 Organization of central banks
* 2.1 Regulates capital adequacy * 2.2 Encourages reserve transparency
* 3 Goal: monetary and financial stability * 4 Role in banking supervision * 5 Financial results * 6 Members
* 7 Leadership
* 7.1 Chairman of the board and president
* 7.2 Vice-chairman
* 7.3 General managers
Board of directors
* 8 Red Books * 9 See also * 10 References * 11 External links
BIS main building in Basel,
The BIS was established in 1930 by an intergovernmental agreement
between Germany, Belgium, France, the United Kingdom, Italy, Japan,
The BIS was originally intended to facilitate reparations imposed on
The BIS’s original task of facilitating World War I reparation
payments quickly became obsolete. Reparation payments were first
suspended (Hoover moratorium, June 1931) and then abolished altogether
(Lausanne Agreement, July 1932). Instead, the BIS focused on its
second statutory task, i.e. fostering the cooperation between its
member central banks. It acted as a meeting forum for central banks
and provided banking facilities to them. For instance, in the late
1930s, the BIS was instrumental in helping continental European
central banks shipping out part of their gold reserves to London and
New York. At the same time, the BIS fell under the spell of the
appeasement illusion. The most notorious incident in this context was
the transfer of 23 tons of gold held by the BIS in London on behalf of
the Czechoslovakian national bank to the German
At the outbreak of the Second World War in September 1939, the BIS
Board of Directors – on which the main European central banks were
represented – decided that the Bank should remain open, but that,
for the duration of hostilities, no meetings of the Board of Directors
were to take place and that the Bank should maintain a neutral stance
in the conduct of its business. However, as the war dragged on
evidence mounted that the BIS conducted operations that were helpful
to the Germans. Also, throughout the war, the BIS accepted gold from
Bretton Woods Conference
Fearing that the BIS would be dissolved, Keynes went to Morgenthau hoping to prevent the dissolution, or have it postponed, but the next day the dissolution of the BIS was approved. However, the liquidation of the bank was never actually undertaken. In April 1945, the new U.S. president Harry S. Truman and the British government suspended the dissolution, and the decision to liquidate the BIS was officially reversed in 1948.
After the Second World War, the BIS retained an outspoken European
focus. It acted as Agent for the European Payments Union (EPU,
1950–58), an intra-European clearing arrangement designed to help
the European countries in restoring currency convertibility and free,
multilateral trade. During the 1960s – the heyday of the Bretton
Woods fixed exchange rate system – the BIS once again became the
locus for transatlantic monetary cooperation. It coordinated the
central banks’ Gold Pool and a number of currency support operations
(e.g. Sterling Group Arrangements of 1966 and 1968). The Group of Ten
(G10) , including the main European economies, Canada,
With the end of the Bretton Woods system (1971–73) and the
transition to floating exchange rates, financial stability issues came
to the fore. The collapse of internationally active banks, such as
Bankhaus Herstatt (1974), highlighted the need for improved banking
supervision at an international level. The G10 Governors created the
From 1964 until 1993, the BIS provided the secretariat for the
Committee of Governors of the Central Banks of the Member States of
the European Community (Committee of Governors). This Committee had
been created by European Council decision to improve monetary
cooperation among the EC central banks. Likewise, the BIS in 1988-89
hosted most of the meetings of the Delors Committee (Committee for the
Study of Economic and Monetary Union), which produced a blueprint for
monetary unification subsequently adopted in the Maastricht Treaty
(1992). In 1993, when the Committee of Governors was replaced by the
European Monetary Institute (EMI – the precursor of the ECB), it
moved location from
In the 1990s-2000s, the BIS successfully globalised, breaking out of
its traditional European core. This was reflected in a gradual
increase in its membership (from 33 shareholding central bank members
in 1995 to 60 in 2013, which together represent roughly 95% of global
GDP), and also in the much more global composition of the BIS Board of
Directors. In 1998, the BIS opened a Representative Office for Asia
and the Pacific in the
The BIS was originally owned by both central banks and private
individuals, since the United States,
ORGANIZATION OF CENTRAL BANKS
BANK REGULATION AND STANDARDS
* Bank for International Settlements
PILLAR 1: REGULATORY CAPITAL
PILLAR 2: SUPERVISORY REVIEW
PILLAR 3: MARKET DISCLOSURE
Business and Economics
* v * t * e
As an organization of central banks, the BIS seeks to make monetary policy more predictable and transparent among its 60-member central banks, except in the case of Eurozone countries which forfeited the right to conduct monetary policy in order to implement the euro. While monetary policy is determined by most sovereign nations, it is subject to central and private banking scrutiny and potentially to speculation that affects foreign exchange rates and especially the fate of export economies. Failures to keep monetary policy in line with reality and make monetary reforms in time, preferably as a simultaneous policy among all 60 member banks and also involving the International Monetary Fund , have historically led to losses in the billions as banks try to maintain a policy using open market methods that have proven to be based on unrealistic assumptions.
Central banks do not unilaterally "set" rates, rather they set goals and intervene using their massive financial resources and regulatory powers to achieve monetary targets they set. One reason to coordinate policy closely is to ensure that this does not become too expensive and that opportunities for private arbitrage exploiting shifts in policy or difference in policy, are rare and quickly removed.
Two aspects of monetary policy have proven to be particularly sensitive, and the BIS therefore has two specific goals: to regulate capital adequacy and make reserve requirements transparent.
REGULATES CAPITAL ADEQUACY
Capital adequacy policy applies to equity and capital assets . These
can be overvalued in many circumstances because they do not always
reflect current market conditions or adequately assess the risk of
every trading position. Accordingly, the
The main role of the
ENCOURAGES RESERVE TRANSPARENCY
Reserve policy is also important, especially to consumers and the domestic economy. To ensure liquidity and limit liability to the larger economy, banks cannot create money in specific industries or regions without limit. To make bank depositing and borrowing safer for customers and reduce risk of bank runs , banks are required to set aside or "reserve".
Reserve policy is harder to standardize as it depends on local
conditions and is often fine-tuned to make industry-specific or
region-specific changes, especially within large developing nations .
For instance, the People\'s Bank of
Effectively, the PBoC sets different reserve levels for domestic and
export styles of development. Historically, the
For various reasons it has become quite difficult to accurately assess reserves on more than simple loan instruments, and this plus the regional differences has tended to discourage standardizing any reserve rules at the global BIS scale. Historically, the BIS did set some standards which favoured lending money to private landowners (at about 5 to 1) and for-profit corporations (at about 2 to 1) over loans to individuals. These distinctions reflecting classical economics were superseded by policies relying on undifferentiated market values—more in line with neoclassical economics .
GOAL: MONETARY AND FINANCIAL STABILITY
The stated mission of the BIS is to serve central banks in their pursuit of monetary and financial stability, to foster international cooperation in those areas and to act as a bank for central banks. The BIS pursues its mission by:
* fostering discussion and facilitating collaboration among central banks; * supporting dialogue with other authorities that are responsible for promoting financial stability; * carrying out research and policy analysis on issues of relevance for monetary and financial stability; * acting as a prime counterparty for central banks in their financial transactions; and * serving as an agent or trustee in connection with international financial operations.
The role that the BIS plays today goes beyond its historical role. The original goal of the BIS was "to promote the co-operation of central banks and to provide additional facilities for international financial operations; and to act as trustee or agent in regard to international financial settlements entrusted to it under agreements with the parties concerned", as stated in its Statutes of 1930.
ROLE IN BANKING SUPERVISION
The BIS hosts the Secretariat of the
The UN agencies, especially ICLEI , are firmly committed to fundamental risk measures: the so-called triple bottom line and were becoming critical of central banking as an institutional structure for ignoring fundamental risks in favour of technical risk management .
The balance sheet total of the BIS on 31 March 2015 was SDR 216.8 billion.
The number of countries represented in each continent are: 35 in
Central Reserve Bank of
The first chairman was Gates W. McGarrah (20 July 1863 - 5 November 1940). In 1898 he became cashier of the Leather Manufacturers National Bank, succeeding to the presidency in 1902. The institution merged with the Mechanics National Bank in 1904 and McGarrah was chosen president. He headed this bank until its merger with the Chase National in 1926. He was the first Chairman of the Federal Reserve Bank of New York May 1925 through February 1930. August 30, 1924 he was appointed as the American director of the general council of the Reichsbank. He was a past president of the New York Clearing House Association .
CHAIRMAN OF THE BOARD AND PRESIDENT
CHAIRMAN NATIONALITY DATES PRESIDENT NATIONALITY DATES
Gates W. McGarrah *
Leon Fraser *
Leonardus J. A. Trip *
O. E. Niemeyer *
Marius W. Holtrop *
Fritz Leutwiler *
W. F. Duisenberg *
Bengt Dennis *
W. F. Duisenberg *
A. H. E. M. Wellink *
* President and chairman. ** None. *** Position abolished on 27 June 2005.
THIS SECTION NEEDS EXPANSION. You can help by adding to it . (November 2014)
NAME NATIONALITY DATES
NAME NATIONALITY DATES
Malcolm D. Knight
Sir Andrew Crockett
BOARD OF DIRECTORS
One of the Group's first projects, a detailed review of payment system developments in the G10 countries, was published by the BIS in 1985 in the first of a series that has become known as "Red Books". Currently the red books cover countries participating in the Committee on Payments and Market Infrastructures (CPMI). A sample of statistical data in the red books appears in the table below, where local currency is converted to US dollars using end-of-year rates.
Banknotes and coin in circulation (12/31/2015) PER CAPITA COUNTRY BILLIONS OF DOLLARS
$9,213 Switzerland $76.31
$6,739 Japan $856.55
$4,911 Singapore $27.18
$4,433 United States $1,424.92
$3,571 Euro area $1,210.42
$2,320 Australia $55.28
$1,708 Saudi Arabia $52.99
$1,641 Canada $58.78
$1,583 United Kingdom $103.09
$1,460 Korea $73.92
$872 Sweden $8.59
$800 Russia $117.05
$599 Mexico $72.02
$458 Turkey $36.06
$282 Brazil $57.75
$195 India $250.80
$113 South Africa $6.15
$1,558 AVERAGE/TOTAL $4,535.84
The most notable currency not included in this table since 2009 is
the Chinese yuan where statistics are listed "not available". In the
* ^ "Board of Directors". www.bis.org/. Archived from the original
on 22 April 2011. Retrieved 2011-04-14.
* ^ "About BIS". www.bis.org. 2005-01-01. Retrieved 2016-03-17.
* ^ "About BIS". Web page of Bank for International Settlements.
Archived from the original on 14 May 2008. Retrieved May 17, 2008.
* ^ "UNTC". treaties.un.org.
* ^ "About the BIS - overview". www.bis.org. 1 January 2005.
* ^ BIS History - Overview. BIS website. Retrieved 2011-02-13.
* ^ "Note on gold shipments and gold exchanges organised by the
Bank for International Settlements, 1st June 1938 - 31st May 1945".
www.bis.org. 1 September 1997.
* ^ Kubu, E. (1998), Czechoslovak gold reserves and their surrender