The Bank for International Settlements (BIS) is an international organisation that fosters international monetary and financial cooperation and serves as a bank for central banks. The BIS fulfils this mandate by acting as:
- a forum to promote discussion and policy analysis among central banks and within the international financial community;
- a centre for economic and monetary research;
- a prime counterparty for central banks in their financial transactions;
- an agent or trustee in connection with international financial operations.
The head office is in Basel, Switzerland and there are two representative offices: in the Hong Kong Special Administrative Region of the People's Republic of China and in Mexico City.
Established on 17 May 1930, the BIS is the world's oldest international financial organisation.
As its customers are central banks and international organisations, the BIS does not accept deposits from, or provide financial services to, private individuals or corporate entities.
The governance of the Bank is determined by its Statutes, which were last revised in June 2005, following a review of the governance of the Bank by three leading independent legal experts.
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 they 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 committee reports.
Currently, the BIS has 56 member central banks, all of which are entitled to be represented and vote in the General Meetings. Voting power is proportional to the number of BIS shares issued in the country of each member represented at the meeting.
At the Annual General Meeting, key decisions by member central banks focus on distribution of the dividend and profit, approval of the annual report and the accounts of the Bank, adjustments in the allowances paid to Board members, and selection of the Bank's external auditors. The Annual General Meeting is held in late June/early July.
Extraordinary General Meetings must be called in order to amend the Statutes of the Bank, change its equity capital or liquidate the Bank.
Member central banks
Members are the central banks or monetary authorities of:
Algeria, Argentina, Australia, Austria, Belgium, Bosnia and Herzegovina, Brazil, Bulgaria, Canada, Chile, China, Croatia, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong SAR, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Latvia, Lithuania, Macedonia (FYR), Malaysia, Mexico, the Netherlands, New Zealand, Norway, the Philippines, Poland, Portugal, Romania, Russia, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Thailand, Turkey, the United Kingdom and the United States, plus the European Central Bank.
A meeting place for central banks
Currently, more than 5,000 senior executives and officials from central banks and supervisory agencies participate in meetings organised by the BIS every year.
The most important meetings held at the BIS are the regular meetings of Governors and senior officials of member central banks. Held every two months in Basel, these gatherings provide an opportunity for participants to discuss the world economy and financial markets, and to exchange views on topical issues of central bank interest or concern. The main result of these meetings is an improved understanding by participants of the developments, challenges and policies affecting various countries or markets. An atmosphere of openness, frankness and informality amongst participants is critical to the success of BIS meetings.
Other meetings of senior central bank officials focus on the conduct of monetary policy, the surveillance of international financial markets and central bank governance issues.
In addition, the BIS organises frequent meetings of experts on monetary and financial stability issues as well as on more technical issues such as legal matters, reserve management, IT systems, internal audit and technical cooperation. Although targeted mostly at central banks, BIS meetings sometimes involve senior officials and experts from other financial market authorities, the academic community and market participants.
Research and statistics
The economic, monetary, financial and legal research of the BIS supports its meetings and the activities of the Basel-based committees. The BIS is also a hub for sharing statistical information amongst central banks, and for publishing statistics on global banking, securities, foreign exchange and derivatives markets.
Research is carried out primarily by BIS staff, supplemented by visiting researchers from central banks and the academic community. From time to time, the BIS organises special meetings and conferences with central bank researchers and academics.
This research finds its way into the Bank's regular publications, such as the Annual Report and Quarterly Review, and into its BIS Papers and Working Papers series, as well as external publications such as professional journals.
Seminars and workshops
Through seminars and workshops organised by its Financial Stability Institute (FSI), the BIS promotes dissemination of the work undertaken by the supervisory community. Not only does the FSI familiarise financial sector supervisors with the recommendations of the Basel Committee on Banking Supervision worldwide, but it also provides practical training for senior participants.
The cooperation with regional central bank groupings also helps to make information about BIS activities more widely known. This cooperation takes the form of participation in meetings by regional central bank groups and the organisation of ad hoc joint meetings or workshops.
Banking services for central banks
The BIS offers a wide range of financial services to assist central banks and other official monetary institutions in the management of their foreign reserves. Some 140 customers, including various international financial institutions, currently make use of these services. BIS financial services are provided out of two linked trading rooms: one at its Basel head office and one at its office in Hong Kong SAR.
The establishment of the BIS
The Bank for International Settlements was established in 1930. It is the world's oldest international financial institution and remains the principal centre 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.
The changing role of the 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 it 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 implementing 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 globalisation, as highlighted by the 1997 Asian crisis, has received a lot of attention.
Apart from fostering monetary policy cooperation, the BIS has always performed "traditional" 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 organised emergency financing to support the international monetary system when needed. During the 1931-33 financial crisis, the BIS organised support credits for both the Austrian and German central banks. In the 1960s, the BIS arranged special support credits for 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 stabilisation programmes (eg for Mexico in 1982 and Brazil in 1998).
The BIS archives are open to the public. Under the BIS open archive rules, all records relating to the Bank's business and operational activities which are over 30 years old are available for consultation, with the exception of a limited number of records.
© 2011 ASSONEBB