The Bank for International Settlements (BIS)
The Bank for International Settlements (BIS) is an international organisation created to promote cooperation between a number of major central banks which are its shareholders and form its Board of Directors. The BIS also functions as a bank for the central banks.
The BIS is the oldest international financial institution. It was founded in 1930 in the context of the Young Plan, which set out a number of proposals for the settlement of the war reparations required from Germany by the Treaty of Versailles.
This task was quickly superseded by events, and the BIS concentrated on cooperation between central banks.
The BIS Annual General Meeting, which brings together 55 shareholding central banks, meets once a year.
The Board of Directors is composed of 17 members.
Today the BIS fulfils four main functions, acting as:
- a forum to promote discussion among central banks;
- a prime counterparty for central banks in their financial transactions;
- a centre for economic and monetary research; and
- an agent or trustee in connection with international financial operations.
The BIS also acts as a host for various committees and independent organisations which put forward recommendations to governments on international financial regulation. In most cases these recommendations must be transposed into national legislation before they can come into force in each country.
One such body is the BIS Basel Committee on Banking Supervision, which promulgates international standards on minimum capital requirements (1998 Basel Capital Accord or Basel I – replaced in 2004 by Basel II). These standards are currently applicable in more than 100 countries.
Two other important BIS committees are the Committee on the Global Financial System and the Committee on Payment and Settlement Systems (CPSS).
The BIS also hosts the secretariats of several independent organisations, including:
- the Financial Stability Board (FSB);
- the International Association of Insurance Supervisors (IAIS); and
- the International Association of Deposit Insurers.