Published Apr 6, 2024 The Bank for International Settlements (BIS) is an international financial institution known as the bank for central banks because its primary purpose 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. Established on 17 May 1930, the BIS is the world’s oldest international financial organization, providing a forum for collaboration among its member central banks and other agencies aiming to promote financial stability globally. Originally, the BIS was formed to oversee the payment of reparations by Germany, as imposed by the Treaty of Versailles after World War I, but its tasks quickly evolved. Today, it provides banking services exclusively to central banks or international organizations. Its key functions include: The BIS also hosts numerous international groups pursuing global financial stability and facilitates their interaction and cooperation. One such example is the Basel Committee on Banking Supervision, which lays down international standards for bank regulation known as the Basel Accords. The importance of the BIS lies in its capacity to foster cooperation and provide support to central banks, ensuring a stable international financial system. It plays a crucial role in international financial regulation, particularly through the development of the Basel Accords. These accords aim to strengthen the regulation, supervision, and practices of banks worldwide, thereby enhancing financial stability. The BIS’s research and policy analysis activities contribute significantly to the understanding of global financial dynamics and inform monetary policy across its member central banks. In a world of increasingly interconnected financial markets, the BIS’s role in promoting financial stability and supporting central banks is more critical than ever. Its efforts in banking supervision, monetary and fiscal policy dialogue, and financial stability monitoring are vital components in the global economic landscape. As of my last update, 63 central banks and monetary authorities are members of the BIS. These members constitute a significant portion of the world’s GDP, representing most of the world’s major economies and encompassing a broad spectrum of more developed and emerging economies. The Basel Accords are a set of recommendations for regulations in banking, issued by the Basel Committee on Banking Supervision (BCBS), which is hosted by the BIS. The Accords ensure that financial institutions have enough capital to meet obligations and absorb unexpected losses. These include Basel I, Basel II, and Basel III, each building upon the last to fortify the regulation, supervision, and risk management within the banking sector. While the BIS does provide banking services, its clients are exclusively central banks, international organizations, or monetary authorities. It does not offer services to individuals or corporate entities. Its banking operations are primarily focused on managing foreign exchange and gold reserves, providing asset management services, and acting as a lender of last resort in times of financial crisis. By facilitating cooperation among central banks and providing a venue for international dialogue on monetary policy, financial stability, and the economic challenges facing its member countries, the Bank for International Settlements plays a foundational role in the international financial and monetary landscape.Definition of Bank for International Settlements (BIS)
History and Functions
Why the BIS Matters
Frequently Asked Questions (FAQ)
How many central banks are members of the BIS?
What are the Basel Accords?
Does the BIS engage in typical banking operations?
Economics