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Bank for International Settlements

BANK FOR INTERNATIONAL SETTLEMENTS

BANK FOR INTERNATIONAL SETTLEMENTS. The Bank for International Settlements (BIS), based in Basel, Switzerland, is the oldest international financial institution in the world and the principal center for international central bank cooperation. Known as the "central bankers' central bank," where more than one hundred central banks from around the world have deposits, the BIS is an important financial intermediary. Unlike a central bank, however, the BIS cannot issue notes, accept bills of exchange, lend money to governments, or hold a majority interest in any business. Its holdings are also immune from appropriation by any government. The BIS was established as the result of the Hague Agreement of 20 January 1930, which dealt with the issue of reparation payments imposed upon Germany in the Treaty of Versailles (1919). The bank opened on 17 May 1930 with an authorized capital of 1,500 million Swiss gold francs, or approximately $26,835,000. One of the first duties of the new bank was to oversee the reparations payments. In addition, the BIS was to promote cooperation among central banks throughout the world. Six countries originally helped start the bank: Belgium, France, Germany, United Kingdom, Italy, and Japan (which sold its interests in 1952). Although the United States has never been formally represented on the Board of Directors of the BIS, Americans have served as presidents of the Bank and in other key administrative posts. Today, the central banks of all Western European nations are members of the BIS. As of 31 March 2000, the total deposits placed with the BIS amounted to $128 billion, representing approximately 7 percent of world exchange reserves. At the same time, the balance sheet for the BIS stood at 76,054 million gold francs, a record for the end of a financial year. In fact, the balance of the BIS would have been larger by some 3.2 billion gold francs were it not for the appreciation of the U.S. dollar between the beginning and the end of the financial year.

Over the last seventy years, the BIS has undertaken a number of important duties, including acting as a forum for central bank cooperation. Through regular meetings, the BIS facilitated the exchange of information among central banks throughout the world, even though during the Bretton Woods Conference of 1944 it was suggested that the BIS be liquidated. The BIS managed capital flows following the two oil crises and the international debt crisis of the 1980s. More recently, the bank has worked hard to promote financial stability in the wake of economic integration and globalization and, when needed, to offer emergency financing in support of the international monetary system. The BIS was instrumental in aiding the transition of western European nations from national currencies to the Euro, adopted in 2002. The BIS also conducts research that contributes to international monetary and financial stability, and collects and publishes statistical data on international finance. Using committees of national experts the BIS regularly makes recommendations to the international financial community that will strengthen the international financial and monetary system.

BIBLIOGRAPHY

Baker, James C. The Bank for International Settlements: Evolution and Evaluation. Westport, Conn.: Greenwood Publishing, 2002.

Bank for International Settlement. BIS 71st Annual Report. Basel: Bank for International Settlements Press, Information and Library Services, June 2001.

Meg GreeneMalvasi

See alsoBretton Woods Conference ; International Monetary Fund ; Versailles, Treaty of .

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Bank for International Settlement

BANK FOR INTERNATIONAL SETTLEMENT

The Bank for International Settlement was established under the law of Switzerland. It also has legal capacity pursuant to the municipal law of each of its member states, but it lacks international legal capacity. It was denied a specific international personality. The bank is, therefore, solely in the control of its members.

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Bank for International Settlements

Bank for International Settlements (BIS), international financial institution est. (1930) in Basel, Switzerland, by bankers and diplomats from Europe, the United States, and Japan. It was originally set up to facilitate Germany's World War I reparation payments (a purpose that was soon abandoned). After World War II, BIS directors were accused of having helped to sell assests obtained illegally by the Nazis from occupied countries, but efforts to scrap the bank failed. The BIS later facilitated Marshall Plan payments (1947 on), acted for the Organization for European Economic Cooperation (1950–58), and helped establish the European monetary union (1960s on). Today its purpose is to serve central banks in their search for financial and monetary stability, to foster international monetary and financial cooperation, and to act as a bank for its members, which consist of 60 central banks and monetary authorities (including the European Central Bank). The BIS is a limited-share company and an international organization, not accountable to any nation but answerable to international law. The BIS promotes discussion and collaboration among central banks, conducts research on matters relating to central banks, acts as a counterparty for central banks in their financial operations, and serves as an agent or trustee in matters related to international finance.

See A. LeBor, Tower of Basel (2013).

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