Bank for International Settlements BIS

Bank for International Settlements (BIS)


international financial institution created in 1930 in Basel, Switzerland, by the central banks of England, France, Germany, Belgium, and Italy, three private US banks headed by the Morgan banking house, and Japanese private banks. The establishment of the BIS was provided for by the Convention of The Hague (the Young Plan, 1930). The bank was assigned to receive and issue German reparations payments, including payments for deliveries in kind; pay intra-alliance debts; carry out operations related to the Young loan, mainly with regard to the USA; and service payments on the Dawes and Young loans. In connection with the cessation of payments of reparations and war debts in 1931, the character of the bank’s activity changed. The BIS buys and sells gold and foreign currency, accepts gold from central banks for safekeeping, grants to and receives from them loans on gold or highly liquid short-term obligations including treasury notes, and buys and sells bonds circulating on the stock market. The bank does not have the right to issue bank notes payable on demand, to accept bills of exchange, to grant loans to governments, or to acquire control of entrepreneurial companies. During World War II (1939–45), gold stolen by the fascists was kept in the BIS. Cooperation continued in the bank between directors of the countries of the anti-Hitler coalition (France, Britain, and the USA) and the fascist countries. The currency and finance conference in Bretton Woods (1944) adopted a decision to liquidate the BIS, but, commanding the support of the reactionary elements of the bank’s member countries, it survived and began to expand its operations. The bank took part in operations of the Marshall Plan and carried out multilateral clearing for the European Payments Union, and after the latter was disbanded, operated in the framework of the European Monetary Agreement. The BIS is the financial agent of the European Coal and Steel Community, the International Red Cross, the World Postal Union, and others. The BIS acts as a European auxiliary agency of the International Monetary Fund and the International Bank for Reconstruction and Development, which it assists in distributing the bank’s bonds in Switzerland. In the early 1960’s the BIS became a center of international agreements of the imperialist powers for the support of the world monetary system of capitalism. It took part in providing credit for England and for the US Federal Reserve System on the basis of “swap”-type agreements (operations in the reciprocal exchange of currency for a period according to a fixed rate of exchange). In 1968–69 it took part in the loans to France. It was the agent for the gold pool. In 1951 Japan withdrew from the BIS. In 1968 the central banks of all the European capitalist and socialist countries except the USSR and the German Democratic Republic belonged to the BIS; the US representative at general stockholders’ meetings is the First National City Bank of New York. In 1970, Japan and Canada became stockholders of BIS.

A total of 75 percent of BIS stock belongs to central banks and 25 percent to private banks and individuals; constituent banks hold more than 50 percent of the shares. The bank’s current affairs are handled by the board of directors, which is made up of the eight managers of the central banks of England, the Federal Republic of Germany, France, Belgium, Italy, Switzerland, Sweden, and the Netherlands and five representatives of financial, industrial, and trade circles, who are appointed by the eight. The BIS has a monetary and economic department, which does research in the area of international monetary and credit relations. It issues an annual survey, in which it gives information and research on the international monetary and credit relations for the year, and a current newsletter. Joint-stock capital in 1930 was established at 500 million gold francs, and in December 1969 it was increased to 1.5 billion francs. On Mar. 31,1969, paid-in capital amounted to 125 million gold francs (1 franc = 0.29 grams of pure gold). The balance was 14.6 billion gold francs, of which 4.8 billion francs were deposits of central banks in gold. Some 6.6 billion francs were held in the form of currency; 4.0 billion francs, on the credit side, in gold bullion; and 9.0 billion francs in loans (most of them short-term).