Bank for International Settlements

From Academic Kids

The Bank for International Settlements (BIS) is a financial international organization established under the Hague agreements of 1930. It was later joined by the International Monetary Fund and World Bank set up under the Bretton Woods agreements of 1944.

Essentially, the Bank seeks to influence reserve policy among the central banks of members. It has historically had less power to do so than it deems necessary. Recent head Andrew Crocket has bemoaned its inability to "hardwire the credit culture" - stating this as an objective.

The Bank sees this as necessary to address specific concerns with growth of Offshore Financial Centres (OFCs), Highly Leveraged Institutions (HLIs), Large and Complex Financial Institutions (LCFIs), deposit insurance and the spread of money laundering and accounting scandals.

A "well-designed financial safety net, supported by strong prudential regulation and supervision, effective laws that are enforced, and sound accounting and disclosure regimes," are among the Bank's goals. In fact they have been in its mandate since its founding. Critics of capitalism, including notable figures with unique experience like George Soros, argue that there is no will to enforce such regulation in the present competitive financial industry, where nations effectively compete to offer less regulation.

Doubts about the Bank's mandate, its program, its effectiveness, and the desirability of any existing institution taking the lead role in accounting reform, especially in light of serious failures of money-laundering law enforcement, major breaches of prudence and supervision in the United States (e.g. Enron), have led to some minor critique of the BIS in the anti-capitalism and anti-globalization movements.

For instance, its attempts to "hardwire the credit culture" ignore the efforts of ecological economics to tie that credit culture to the science of ecology, and means of measuring well-being. The Bank seeks predictability, say its critics, rather than true sustainability. Criticism has been muted in comparison with that focused on IMF, the World Trade Organization and World Bank policies, however.

The BIS has played a central role in establishing the Basel Capital Accords of 1988 and 2004.

The BIS was originally owned by both the governments and private individuals, since the United States and France had decided to sell some of their shares to private investors. BIS shares traded on stock markets, making the bank quite a unique organisation: an international organisation (in the technical sense of public international law), yet with private shareholders! However, in more recent years the BIS has forcibly bought back all shares held by private investors, and is now wholly owned by its member governments.

The BIS is a frequent target of allegations by conspiracy theorists, many of whom portray it as a front organisation through which a wealthy elite controls the world. Some argue that the bank has not helped matters through a culture of secretiveness; lack of information always encourages some people to imagine what they do not know.


See also

External links

nl:Bank for International Settlements zh:國際清算銀行


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