The BIS (Bank for International Settlements) was established in the context of the Young Plan, adopted on January 20, 1930, at the Hague Conference.
On the same date, the governments of Belgium, France, Germany, Italy, Japan, and the United Kingdom, on the one hand, and Switzerland, on the other, signed a convention respecting the establishment of the BIS in Basel, Switzerland.
The Young Plan was intended to settle once and for all the question of reparation payments imposed on Germany (and to a lesser extent on other central European countries) by the Treaty of Versailles following the First World War.
With the reparations issue out of the way, the BIS focused its activities on the technical cooperation between central banks (including reserve management, foreign exchange transactions, international postal payments, gold deposit and swap facilities) and on providing a forum for regular central bank Governors’ meetings.
The regular Board meeting weekends, which brought together the Governors of the central banks, were the most important (in the 1930s, the BIS Board consisted of the Governors and their alternates of the National Bank of Belgium, the Bank of France, the German Reichsbank, the Bank of Italy, the Netherlands Bank, the Swedish Riksbank, the Swiss National Bank and the Bank of England, as well as representatives for the Bank of Japan).
From early on, the BIS developed its research in central banking and finance. The BIS research was featured in the Bank’s Annual Report, which soon established itself as a leading publication in its field.
In the aftermath of World War II, Europe prioritised stabilising the different national currencies before trade and foreign exchange restrictions could be gradually lifted.
When the Benelux countries, France and Italy concluded the first Agreement on Multilateral Monetary Compensation in November 1947, they turned to the BIS as the technical agent for this scheme. In September 1950, 18 European countries established a European Payments Union (EPU) and appointed the BIS as its agent.
The European Monetary Cooperation Fund (1973) and the European Monetary System (1979) were operated from Basel, with the BIS providing the necessary technical support.
In 1988-89, the Committee for the Study of Economic and Monetary Union, chaired by European Commission President Jacques Delors (1925), convened in Basel and laid the technical groundwork for the European Council’s decision to move towards a full European monetary union as approved by the 1992 Treaty of Maastricht.
With the implementation of the first phase of the monetary union at the end of 1993, the Committee of Governors was replaced by the European Monetary Institute (EMI), which then moved from Basel to Frankfurt. In 1997, the EMI became the European Central Bank.
The outbreak of the global financial and banking crisis in 2007-08 accelerated the transformation of the international monetary system’s governance structure.
The crisis has renewed and emphasised financial stability issues, particularly the need for a macroprudential approach to financial stability.
Another focus has been on providing more timely and more relevant financial statistics. The BIS banking statistics have long offered a unique means of assessing key vulnerabilities. As part of continuous enhancement efforts, a central data hub was established at the BIS in 2012 to provide national supervisory authorities with improved data on the credit exposures of global systemically important banks.
Through these initiatives, the BIS aims to remain true to its historical and current mission: to serve the global central banking community, foster cooperation among central banks, and promote monetary and financial stability.
(Source and further Information: Bank for International Settlements)
