History of Bank for International Settlements (BIS)

The Bank for International Settlements (BIS) was founded in 1919 in the aftermath of World War I and the Treaty of Versailles, which ended the war. The treaty placed huge monetary compensation and duties on Germany and other defeated countries, resulting in European economic and financial instability. The proposal of establishing an entity to promote coordination among central banks came up in response to the problems of post-war reconstruction and international monetary cooperation.

Here is a timeline of significant events in the BIS’s history:

1. 1919: At the Paris Peace Conference in 1919, the idea of an international financial institution to enhance collaboration among central banks was advocated.

2. 1930: On May 17, 1930, the Bank for International Settlements was created in Basel, Switzerland. Belgium, France, Germany, Italy, Japan, the United Kingdom, and the United States are among its founding members. The purpose is to encourage monetary and financial stability while also serving as a forum for cooperation among central banks.

3. 1931: The global economic crisis worsens, and the BIS plays a role in coordinating international responses. It allows central bank interactions and agreements to stabilize exchange rates and address financial difficulties.

4. 1939 to 1945 (World War II): The BIS continues to function during the war but with constraints due to the political circumstances. During this time, its operations were reduced.

5. 1944: The Bretton Woods Conference created the International Monetary Fund (IMF) and the World Bank, laying the foundations for the postwar international monetary system. The BIS continues active but with a reduced role in comparison to its pre-war function.

6. 1950-1960s: The BIS refocuses its efforts on providing a forum for central banks to exchange information and collaborate on technical concerns such as banking laws and payment systems.

7. 1970s: The fall of the Bretton Woods system caused increasing currency rate volatility and economic challenges in the 1970s. The BIS encourages dialogue among central banks to address these concerns.

8. 1980s-1990s: The BIS expanded its role in promoting talks on financial stability, banking laws, and market developments during the 1980s and 1990s. It serves as a focal point for central banks to collaborate on monetary policy and financial stability issues.

9. 2000s: The BIS keeps expanding, undertaking research, promoting conferences, and providing a venue for central banks to discuss emerging global financial system problems.

10. 2007-08: The BIS is actively involved in investigating the causes and consequences of the global financial crisis that hit in 2007-2008. It highlights the relevance of stronger regulatory frameworks and improved risk-management strategies.

11. Current Scenario: The BIS is still a vital entity for central bank collaboration, analysis, and coordination on international monetary and financial issues. Its activities include research publications, seminars, and providing central banks with various types of financial services.

Throughout its existence, the BIS has responded to the changing dynamics of the global economic and financial system, playing a significant part in encouraging global cooperation in monetary policy, stability in the economy, and central bank cooperation.