The Bank for International Settlements

The Bank for International Settlements (BIS) is the proverbial ‘IT staff’ of the global economy. While other international economic institutions are highly visible, the BIS remains mostly out of the public eye while it weaves a set of rules, norms and decision-making procedures that establish governance structures for both public and private international banks. Without the BIS, information sharing among central banks and private financial institutions would be seriously troubled. These institutions would face severe information asymmetries, their assessments of creditworthiness would be harder to establish, and the effective management of currency crises would be more difficult to achieve. In an environment where average daily turnover in foreign exchange markets is now US$1.9 trillion, and the market for investment risk protection alone is worth US$4.5 trillion per year, the BIS’s ‘firewalls’ are important to prevent the global financial system from being, as it were, ‘spammed’. Yet, like our lack of understanding of how the IT staff is (most of the time) able to prevent the e-mail system from crashing or our files being wiped, most of us don’t know exactly what the BIS does to provide us with the networks that allow global finance to run smoothly (at least most of the time). Known as the ‘Bank of Central Banks’, the BIS’s original charge in 1930 was to ‘promote the co-operation of central banks and to provide additional facilities for international financial operations; and to act as a trustee or agent in regard to international financial settlements entrusted to it under agreements with the parties concerned’. Today, the BIS still provides an institutional space for the sharing of information among central bank governors, but it is equally concerned with the development of international banking regulation and the collation and dissemination of financial data to international financial institutions and private financial market actors. This Global Monitor report provides an overview of the purposes and functions of the BIS and the Basle Committee on Banking Supervision, as well as contemporary problems and debates in international cooperation for financial regulation. The report provides a description of the BIS’s institutional New Political Economy, Vol. 11, No. 1, March 2006