Bank for International Settlements (BIS)

• What is BIS?
  
  
• What is the role of BIS?
  
  
• How is BIS Governed?
  
  
• Which are the member countries?
  
  
• Where is BIS situated?
  
  

What is BIS?

The Bank for International Settlements was established in 1930. It is the world�s oldest international financial institution and remains the principal center for international central bank cooperation.

The BIS was established in the context of the Young Plan (1930), which dealt with the issue of the reparation payments imposed on Germany by the Treaty of Versailles following the First World War. The new bank was to take over the functions previously performed by the Agent General for Reparations in Berlin: collection, administration and distribution of the annuities payable as reparations. The Bank�s name is derived from this original role. The BIS was also created to act as a trustee for the Dawes and Young Loans (international loans issued to finance reparations) and to promote central bank cooperation in general.

The reparations issue quickly faded, focusing the Bank�s activities entirely on cooperation among central banks and, increasingly, other agencies in pursuit of monetary and financial stability.

What is the role of BIS?

Since 1930, central bank cooperation at the BIS has taken place through the regular meetings in Basel of central bank Governors and experts from central banks and other agencies. In support of this cooperation, the Bank has developed its own research in financial and monetary economics and makes an important contribution to the collection, compilation and dissemination of economic and financial statistics.

In the monetary policy field, cooperation at the BIS in the immediate aftermath of the Second World War and until the early 1970s focused on implanting and defending the Bretton Woods system. In the 1970s and 1980s, the focus was on managing cross-border capital flows following the oil crises and the international debt crisis. The 1970s crisis also brought the issue of regulatory supervision of internationally active banks to the fore, resulting in the 1988 Basel Capital Accord and its Basel II revision of 2001-06. More recently, the issue of financial stability in the wake of economic integration and globalization, as highlighted by the 1997 Asian crisis, has received a lot of attention.

Apart from fostering monetary policy cooperation, the BIS has always performed �tradition� banking functions for the central bank community (e.g. gold and foreign exchange transactions), as well as trustee and agency functions. The BIS was the agent for the European Payments Union (EPU, 1950-58), helping the European currencies restore convertibility after the Second World War. Similarly, the BIS has acted as the agent for various European exchange rate arrangements, including the European Monetary System (EMS, 1979-94) which preceded the move to a single currency.

Finally, the BIS has also provided or organized emergency financing to support the international monetary system when needed. During the 1931-33 financial crisis, the BIS organized support credits for both the Austrian and German central banks. In the 1960s, the BIS arranged special support credits for the Italian lira (1964) and the French franc (1968), and two so called Group Arrangements (1966 and 1968) to support the sterling. More recently, the BIS has provided finance in the context of IMF-led stabilization programs (e.g. for Mexico in 1982 and Brazil in 1998).

How is BIS Governed?

The governance of the Bank is determined by its Statutes. The three most important decision-making bodies within the Bank are:

• The General meeting of member central banks
• The Board of Directors
• The Management of the Bank

Decisions taken at each of these levels concern the running of the Bank and as such are mainly of an administrative and financial nature, related to its banking operations, the policies governing internal management of the BIS and the allocation of budgetary resources to the different business areas.

The Bank�s administrative and budgetary rules apply to the committees hosted by the BIS. Other aspects of the committees� governance are the responsibility of the body to which each reports.

Which are the member countries?

The following countries are the member countries of the BIS.

Where is BIS situated?

The BIS is located in Basel, Switzerland.

The following is its address,
Bank for International Settlements
Centralbahnplatz 2
Basel, Switzerland