Bank for International Settlement (BIS)

The International Organization, founded in 1930 in Basel, Switzerland, aims to establish cooperative relationships between central banks around the world in developing government financial activities, serving payment transactions, and acting as a guarantor for the IMF providing loans to developing countries (Bank for International Settlements / BIS) ).

Financial Fervices Authority

History of the Bank for International Settlements

The Bank for International Settlement (BIS) was established on May 17, 1930 for the reparations of the German war imposed by the Treaty of Versailles. The original members are Germany, Belgium, France, England, Italy, Japan, the United States and Switzerland. Repairs are stopped shortly after the establishment of the bank, and BIS becomes a forum for cooperation and partners for transactions between central banks .

During World War II the BIS became a neutral bank, but many saw the BIS conspire with the Nazi war effort, beginning with the transfer of the national bank of Czechoslovakia to the German Reichsbank in early 1939. At the end of the war, the Allies agreed to close the BIS down, but the decision was not implemented, in part at the urging of John Maynard Keynes. While the Bretton Woods agreement remains in force, BIS plays an important role in maintaining the convertibility of international currencies . It also acted as an agent for the 18-nation European Payment Union, a settlement system that helped restore convertibility between European currencies from 1950 to 1958.

When the world exchange rate floated in the 1970s, BIS and BCBS (The Basel Committee on Banking Supervision) focused on financial stability, developing capital requirements for banks based on the risk of their financial position. The Basel Accords produced have been widely adopted by national governments to regulate their banking systems . Negotiations on Basel III, an update to the previous agreement that came in response to the financial crisis, was completed in December 2017.

In recent years, BIS has bought back shares that were traded publicly. Currently its shares are owned by members of the BIS (central bank) but still operate in the private market as partners, asset managers and lenders for central banks and international financial institutions . The profits from the transaction are used to fund other banks’ international activities.

Duties of the Bank for International Settlements

  1. Encourage discussion and facilitate collaboration between central banks.
  2. Support dialogue with other authorities responsible for promoting financial stability.
  3. Conducting research and policy analysis on issues relevant to monetary and financial stability.
  4. Acting as the main partner for the central bank in their financial transactions.
  5. Serve as an agent or trustee in connection with international financial operations.

 

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