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The Bank for International Settlements (or BIS) is an international organization of central banks which "fosters international monetary and financial cooperation and serves as a bank for central banks. International Organization is a peer-reviewed Academic journal that covers the entire field of International affairs. A central bank, reserve bank, or monetary authority is the entity responsible for the Monetary policy of a country or of a group of member states "  The BIS carries out its work through subcommittees, the secretariats it hosts, and through its annual General Meeting of all members. It also provides banking services, but only to central banks, or to international organizations like itself. Based in Basel, Switzerland, the BIS was established by the Hague agreements of 1930. "Basilia" redirects here For the Fly Genus, see Basilia (fly. Switzerland (English pronunciation; Schweiz Swiss German: Schwyz or Schwiiz Suisse Svizzera Svizra officially the Swiss Confederation Year 1930 ( MCMXXX) was a Common year starting on Wednesday (link will display 1930 calendar of the Gregorian calendar. The name of the BIS in German: Bank für Internationalen Zahlungsausgleich (BIZ), in French: Banque des Reglements Internationaux (BRI), in Italian: Banca dei Regolamenti Internazionali (BRI), in Spanish (not an official BIS language): Banco de Pagos Internacionales (BPI). It has representative offices in Hong Kong (SAR) and Mexico City.
As an organization of central banks, the BIS seeks to make monetary policy more predictable and transparent among its 55 member central banks. Monetary policy is the process by which the Government, Central bank, or monetary authority of a country controls (i the Supply of Money, While monetary policy is determined by each sovereign nation, it is subject to central and private banking scrutiny and potentially to speculation that affects foreign exchange rates and especially the fate of export economies. The foreign exchange ( currency or forex or FX) market refers to the market for currencies. In Economics, an export is any good or Commodity, Transported from one country to another country in a Legitimate fashion Failures to keep monetary policy in line with reality and make monetary reforms in time, preferably as a simultaneous policy among all 55 member banks and also involving the International Monetary Fund, have historically led to losses in the billions as banks try to maintain a policy using open market methods that have proven to be unrealistic. Monetary Reform describes any movement or theory that proposes a different system of supplying Money and financing the economy than the current system Simultaneous policy requires governments in all jurisdictions at once worldwide to implement a policy shift at once so that none is disadvantaged or unfairly advantaged The International Monetary Fund ( IMF) is an International organization that oversees the Global financial system by following the Macroeconomic In Economics, the open market is the term used to refer to the environment in which bonds are bought and sold Central banks do not unilaterally "set" rates, rather they set goals and intervene using their massive financial resources and regulatory powers to achieve monetary targets they set. One reason to coordinate policy closely is to ensure that this does not become too expensive and that opportunities for private arbitrage exploiting shifts in policy or difference in policy, are rare and quickly removed. In Economics and Finance, arbitrage is the practice of taking advantage of a price differential between two or more Markets striking a combination of matching
Two aspects of monetary policy have proven to be particularly sensitive, and the BIS therefore has two specific goals: to regulate capital adequacy and make reserve requirements transparent. The capital requirement is a Bank regulation, which sets a framework on how Banks and Depository institutions must handle their capital. The reserve requirement (or required reserve ratio) is a Bank regulation that sets the minimum reserves each Bank must hold to customer
Capital adequacy policy applies to equity and capital assets. Software for Fixed assets management and Stock control developed in 2004. Capital asset has two related meanings in the fields of accounting and financial economics These can be overvalued in many circumstances. Accordingly the BIS requires bank capital/asset ratio to be above a prescribed minimum international standard, for the protection of all central banks involved. The BIS' main role is in setting capital adequacy requirements. From an international point of view, ensuring capital adequacy is the most important problem between central banks, as speculative lending based on inadequate underlying capital and widely varying liability rules causes economic crises as "bad money drives out good" (Gresham's Law). Gresham's law is commonly stated "Bad money drives out good Specific policies are explained below.
Reserve policy is also important, especially to consumers and the domestic economy. To insure liquidity and limit liability to the larger economy, banks cannot create money in specific industries or regions without limit. Market liquidity is a Business, Economics or Investment term that refers to an Asset 's ability to be easily converted through an act of buying To make bank depositing and borrowing safer for customers and reduce risk of bank runs, banks are required to set aside or "reserve".
Reserve policy is harder to standardize as it depends on local conditions and is often fine-tuned to make industry-specific or region-specific changes, especially within large developing nations. Developing countries are countries that haven't reached Western-style standards of democratic government free market economy industrialization social programs and human rights guaranties For instance, the People's Bank of China requires urban banks to hold 7% reserves while letting rural banks continue to hold only 6%, and simultaneously telling all banks that reserve requirements on certain overheated industries would rise sharply or penalties would be laid if investments in them did not stop completely. The People's Bank of China ( PBC or PBOC) ( is the Central bank of the People's Republic of China (not to be confused with the Bank The PBoC is thus unusual in acting as a national bank, focused on the country not on the currency, but its desire to control asset inflation is increasingly shared among BIS members who fear "bubbles", and among exporting countries that find it difficult to manage the diverse requirements of the domestic economy, especially rural agriculture, and an export economy, especially in manufactured goods. The term national Bank has several meanings especially in Developing countries, a bank owned by the State an ordinary private Assets inflation is an economic phenomenon denoting a rise in Price of Assets as opposed to ordinary Goods and services. An economic bubble (sometimes referred to as a speculative bubble, a market bubble, a price bubble, a financial bubble, or a speculative Effectively, the PBoC sets different reserve levels for domestic and export styles of development. Historically, the US also did this, by dividing federal monetary management into nine regions, in which the less-developed Western US had looser policies.
For various reasons it has become quite difficult to accurately assess reserves on more than simple loan instruments, and this plus the regional differences has tended to discourage standardizing any reserve rules at the global BIS scale. Historically, the BIS did set some standards which favoured lending money to private landowners (at about 5 to 1) and for-profit corporations (at about 2 to 1) over loans to individuals. These distinctions reflecting classical economics were superseded by policies relying on undifferentiated market values - more in line with neoclassical economics. Classical economics is widely regarded as the first modern school of economic thought. Neoclassical economics is a term variously used for approaches to Economics focusing on the determination of prices outputs and income distributions in markets
The BIS sets "requirements on two categories of capital, Tier 1 capital and Total capital. Tier 1 capital is the book value of its stock plus retained earnings. Tier 1 capital is the core measure of a Bank 's financial strength from a Regulator 's point of view Tier 2 capital is loan-loss reserves plus subordinated debt. Tier 2 capital is a measure of a bank's financial strength with regard to the second most reliable form of Financial capital, from a Regulator 's point of view Total capital is the sum of Tier 1 and Tier 2 capital. Tier 1 capital must be at least 4% of total risk-weighted assets. Total capital must be at least 8% of total risk-weighted assets. When a bank creates a deposit to fund a loan, its assets and liabilities increase equally, with no increase in equity. That causes its capital ratio to drop. Thus the capital requirement limits the total amount of credit that a bank may issue. It is important to note that the capital requirement applies to assets while the bank reserve requirement applies to liabilities. " - from an extremely detailed and robust account of the use of reserve policy and other central bank powers in China by Henry C. K. Liu.
The relatively narrow role the BIS plays today does not reflect its ambitions or historical role.
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. Accounting reform is an expansion to Accounting rules that goes beyond the realm of financial measures for both individual economic entities and national economies In fact they have been in its mandate since its founding in 1930 as a means to enforce the Treaty of Versailles. The Treaty of Versailles was one of the peace treaties at the end of World War I. See history below.
The BIS has historically had less power to enforce this "safety net" than it deems necessary. Recent head Andrew Crocket has bemoaned its inability to "hardwire the credit culture," despite many specific attempts to address specific concerns such as the growth of Offshore Financial Centres (OFCs), Highly Leveraged Institutions (HLIs), Large and Complex Financial Institutions (LCFIs), deposit insurance and especially the spread of money laundering and accounting scandals. An offshore financial centre (or OFC) although not precisely defined is usually a low- Tax, lightly Regulated jurisdiction which specializes in providing Large and Complex Financial Institutions, or LCFI is a polite term for the Bulge bracket banks Explicit deposit insurance is a measure introduced by Policy makers in many Countries to protect deposits in full or in part in the event of a "run" Money laundering is the practice of engaging in financial Transactions in order to conceal the Identity, source and/or destination of Money, Accounting scandals, or corporate accounting scandals are political and business scandals which arise with the disclosure of misdeeds by trusted executives
Despite its recent history of taking a narrow central bank mediation role, the BIS was originally formed to facilitate money transfers arising from settling an obligation arising from a peace treaty. After World War I, the need for the bank was suggested in 1929 by the Young Committee, as a means of transfer for German reparations payments - see Treaty of Versailles. World War I (abbreviated WWI; also known as the First World War, the Great War, and the War to End All The Young Plan was a program for settlement of German reparations debts after World War I. The Treaty of Versailles was one of the peace treaties at the end of World War I. The plan was agreed in August of that year at a conference at the Hague, and a charter for the bank was drafted at the International Bankers Conference at Baden Baden in November. Baden-Baden is a town in Baden-Württemberg, Germany. It is located on the western foothills of the Black Forest, on the banks of the Oos River The charter was adopted at a second Hague Conference on January 20, 1930. Events 250 - Emperor Decius begins a widespread persecution of Christians in Rome. Year 1930 ( MCMXXX) was a Common year starting on Wednesday (link will display 1930 calendar of the Gregorian calendar.
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. The Economy of the United States is the largest national economy in the world This article addresses the current economic situation of France In financial markets, a share is a Unit of account for various financial instruments including Stocks Mutual funds Limited partnerships BIS shares traded on stock markets, which made the bank a unique organisation: an international organisation (in the technical sense of public international law), yet with private shareholders. International law is the term commonly used for referring to the system of implicit and explicit agreements that bind together nation-states in adherence to recognized values and standards Many central banks had similarly started as such private institutions, for example the Bank of England was privately owned until 1946. The Bank of England (formally the Governor and Company of the Bank of England) is a state-owned institution and the Central bank of the United Kingdom In more recent years the BIS has forcibly bought back all shares held by private investors, and is now wholly owned by its member central banks.
Since 2004, the BIS has published its accounts in terms of Special Drawing Rights, or SDRs, replacing the Gold Franc as the bank's unit of account. Special Drawing Rights ( SDRs) is a potential claim on the freely usable currencies of International Monetary Fund members The gold franc was the unit of account for the Bank for International Settlements from 1930 until April 1, 2003. A unit of account is a standard monetary unit of measurement of the market value/cost of goods services or assets As of March 31, 2007, the bank had total assets of U. Events 307 - After divorcing his wife Minervina, Constantine marries Fausta, the daughter of the retired Roman Emperor Year 2007 ( MMVII) was a Common year starting on Monday of the Gregorian calendar in the 21st century. S. $409. 15 billion, given a dollar/SDR exchange rate of 1. 51 for March 30, 2007. Events 240 BC - 1st recorded Perihelion passage of Halley's Comet. Year 2007 ( MMVII) was a Common year starting on Monday of the Gregorian calendar in the 21st century. Included in that total were 150 tonnes of fine gold.
The BIS provides the Basel Committee on Banking Supervision with its twelve-member secretariat, and with it has played a central role in establishing the Basel Capital Accords of 1988 and 2004. The Basel Committee on Banking Supervision is an institution created by the Central bank Governors of the Group of Ten nations. The Basel Accord(s or Basle Accord(s (see spelling section below refers to the banking supervision Accords (recommendations on banking laws and regulations There remain significant differences between US, EU and UN officials regarding the degree of capital adequacy and reserve controls that global banking now requires. Put extremely simply, the US as of 2006 favoured strong strict central controls in the spirit of the original 1988 accords, the EU was more inclined to a distributed system managed collectively with a committee able to approve some exceptions. The UN agencies especially ICLEI are firmly committed to fundamental risk measures: the so-called triple bottom line and were becoming critical of central banking as an institutional structure for ignoring fundamental risks in favour of technical risk management. The triple bottom line (or " TBL " " 3BL " or " People Planet Profit " captures an expanded spectrum of values and criteria For non-business risks see Risk or the disambiguation page Risk analysis.
The UN agencies are echoing a broader complaint. It has been argued by numerous critics of capitalism, including George Soros, that there is no current will to enforce any significant regulation in the present competitive financial industry. Capitalism is the Economic system in which the Means of production are owned by private Persons and operated for Profit and where George Soros (ˈsɔroʊs or /ˈsɔrəs/ Hungarian ˈʃoroʃ (born August 12, 1930, in Budapest, Hungary, as György Schwartz) is In this situation nations effectively compete to offer less regulation.
Asserting that a stronger role for the BIS is a necessary hedge against the ideology prevailing at the International Monetary Fund, stick reserve and capital discipline are based on a non-ideological analysis of fundamental liabilities. The International Monetary Fund ( IMF) is an International organization that oversees the Global financial system by following the Macroeconomic To prevent disastrous cases like the IMF, the BIS must rationally and scientifically assess risk in oder to prevent load disbursement from passing development policy trends.
Other doubts about the BIS'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. Accounting reform is an expansion to Accounting rules that goes beyond the realm of financial measures for both individual economic entities and national economies g. Enron), have led to some minor critique of the BIS in the anti-capitalism and anti-globalization movements. Enron Creditors Recovery Corporation (formerly Enron Corporation, former NYSE ticker symbol ENE was an American Energy company based in Anti-capitalism describes a wide variety of movements ideas and attitudes which oppose Capitalism. " Anti-globalization " is a term that encompasses a number of related ideas This is incidental usually to critiques of the IMF and World Bank, whose role is far more visible, and which have far more discretion in their policy. The World Bank is an internationally supported Bank that provides financial and technical assistance to developing countries for development programs (e
The BIS is also a frequent target of allegations by conspiracy theorists, many of whom portray it as a front organization through which a wealthy elite controls the world. A conspiracy theory attributes the ultimate cause of an event or chain of events (usually Political, Social or Historical events or the concealment Some argue that the bank has not helped matters through a culture of secretiveness, and that lack of information always encourages some people to imagine what they do not know.
It is still yet undetermined who was exactly responsible for the movement ₤6,000,000 of Czechoslovak gold from the Bank of England to the German Reichsbank, in 1939. 
". . . the powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. "
Carroll Quigley, Tragedy and Hope: A History of the World in Our Time (1966)