- The Bank for International Settlements is an international financial institution that aims to promote global monetary and financial stability.
Enrich Your Learning:
Bank for International Settlements (BIS)
- The Bank for International Settlements (BIS) is often called the “central bank for central banks” because it provides banking services to institutions such as the European Central Bank and Federal Reserve.
- It is based in Basel, Switzerland, with representative offices in Hong Kong and Mexico City.
- These services include conducting gold and currency transactions, as well as making short-term collateralized loans.
- The BIS also encourages cooperation among central banks.
- The Basel Committee for Banking Supervision (BCBS), while technically separate from the BIS, is a closely associated international forum for financial regulation that is housed in the BIS’ offices in Basel, Switzerland.
- The BCBS is responsible for the Basel Accords, which recommend capital requirements and other banking regulations that are widely implemented by national governments.
- The BIS also conducts research into economic issues and publishes reports.
- The BIS was established in 1930 by an intergovernmental agreement between Germany, Belgium, France, the United Kingdom, Italy, Japan, the United States, and Switzerland.
- The BIS was originally intended to facilitate reparations imposed on Germany by the Treaty of Versailles after World War I, and to act as the trustee for the German Government International Loan (Young Loan) that was floated in 1930.
- The need to establish a dedicated institution for this purpose was suggested in 1929 by the Young Committee, and was agreed to in August of that year at a conference at The Hague.
Mission of the BIS:
- 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 BIS hosts the Secretariat of the Basel Committee on Banking Supervision and with it has played a central role in establishing the Basel Capital Accords of 1988, Basel II framework in 2004 and more recently Basel III framework.