The Bank for International Settlements, located in Basel, Switzerland,
is the world's oldest international financial institution. It was established
in 1930 to help collect and distribute the reparations imposed upon Germany
by the Treaty of Versailles and to promote co-operation between the various
central banks of the world. Over time the importance of its
war-related tasks diminished, freeing up resources to focus on its other
Today, the bank sees its mission as four-fold:
- Provide a forum for central bank co-operation.
- Conduct research contributing to global monetary and financial stability.
- Provide traditional banking functions, such as reserve management and
clearing of gold transactions, for the world's central banks.
- Provide and organize emergency financing to support the international
As a forum for central bankers the bank's Monetary and Economic Department
runs the Committee on the Global Financial System and the Committee on Payment
and Settlement Systems. These two committees set the rules by which
central banks abide for the transfer of funds between nations as well the rules
that most central banks impose upon banks, insurance companies, hedge funds,
mutual funds, and investment banks in their international dealings.
As a research institution the bank gathers a wide range of economic data
from all countries of the world and provides detailed statistical
analysis of the economic conditions of each country. It also conducts
policy related research aimed at producing recommendations for the
structure, functioning, and regulation of the world's financial system.
It has working groups focusing specifically on areas including credit
risk, capital flows, liquidity, inflation, and
BIS offers traditional banking services to its central bank clients at
its offices in Basel as well as at the BIS regional facility in Hong Kong.
These services include the clearing and settlement of gold transactions,
management of a central bank's foreign reserve.
Finally, the bank acts as a lender of last resort to countries
that are facing acute economic crises. It bailed out the central
banks of Germany and Austria
during the financial crisis of 1931-33, it propped up the Italian lira in
1964, and contributed significant resources to the bail out of Brazil