The Bank for International Settlements (BIS) is an international financial institution owned by central banks and headquartered in Basel, Switzerland. It acts as a bank for central banks, providing them with deposit, investment, gold and foreign exchange services, and it serves as a forum for central bank cooperation. It also hosts several committees that write global standards for banking supervision and financial market infrastructure.
The BIS does not supervise banks, issue currency or lend to governments in the manner of the International Monetary Fund (IMF). Its influence comes from its role as a meeting place for central banks, its research, and the standards developed by the committees it hosts. For a structured profile, see the BIS industry body profile.
History
The BIS was founded in 1930 under the Hague Agreements as part of the Young Plan, which reorganized the payment of German war reparations after the First World War. It was established to receive and distribute reparation payments and to promote cooperation among central banks, making it the oldest international financial institution. When reparations were suspended in the early 1930s, its cooperative role became central.
The bank's activities during the Second World War, including its acceptance of gold from the German Reichsbank, drew sharp criticism, and the 1944 Bretton Woods conference recommended its liquidation. The recommendation was never implemented. In the post-war period the BIS acted as agent for European payment arrangements and supported the operation of the Bretton Woods system, including through gold market cooperation among central banks.
Banking services for central banks
A large share of the world's central banks hold part of their foreign exchange reserves with the BIS. It accepts deposits, offers investment products, conducts foreign exchange and gold transactions including gold swaps, and can provide short-term credit to central banks, generally on a secured basis. Its own accounts are kept in Special Drawing Rights (SDR).
Committees hosted by the BIS
The BIS provides secretariats and facilities to a group of committees and associations that set or coordinate global standards:
- The Basel Committee on Banking Supervision (BCBS), which writes the Basel framework, including Basel III, on bank capital and liquidity.
- The Committee on Payments and Market Infrastructures (CPMI), which sets standards for payment, clearing and settlement systems and leads work on cross-border payments.
- The Committee on the Global Financial System, the Markets Committee and the Irving Fisher Committee on central bank statistics.
The BIS also hosts the secretariat of the Financial Stability Board and of international associations of deposit insurers and insurance supervisors. These bodies are independent in their decisions; the BIS provides their institutional home.
Governance and ownership
The BIS is owned by its member central banks, which number more than 60 and represent most of world GDP. Its governance includes a General Meeting of members and a Board of Directors drawn from central bank governors, with day-to-day management led by a General Manager. Its legal status in Switzerland is set by a headquarters agreement that grants it immunities typical of international organizations.
Research and innovation
The BIS publishes an Annual Economic Report, a Quarterly Review and the triennial central bank survey of foreign exchange and OTC derivatives markets, a standard source on FX market turnover. Since 2019 its Innovation Hub has run experimental projects with central banks on central bank digital currencies, tokenized deposits and cross-border settlement, exploring how central bank money could be used more efficiently across borders.