Bank for International Settlements (BIS), General characteristics, goals and objectives, Management - International Finance

Bank for International Settlements (BIS) - Bank for International Settlements (BIS)

General characteristics, goals and objectives

The Bank for International Settlements (BIS) is an intergovernmental financial organization founded in 1930 to assist and coordinate the implementation of reparation payments between national central banks after the First World War. Interestingly, although a moratorium on reparation payments was announced shortly after the bank's work began, he continued to implement international financial transactions and gradually turned into the "central banks bank" European countries (OECD).

This bank currently plays a prominent role in regulating the activities of banking institutions. BIS is not part of the Bretton Woods institutions; it is created as an interstate bank combining the conduct of commercial operations for central banks of a number of Western European countries with the role of an organizer and participant of international cooperation at gold. Since then, its functions have changed significantly and become more diverse, extending to all OECD countries. The Bank closely interacts with central banks in conducting international financial transactions, as well as in exchange rate policies. In fact, the bank has become an important subsidiary body of the system of international institutions of a global nature (IMF), regulating, in particular, the rules for commercial banks having the status of international banks.

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The creation of the IMF after the 1944 Bretton Woods Conference limited the further expansion of the international role and activities of the BIS. His new expansion began in the 1970s and 1980s. and is related in particular to the rapid growth in the US of the use of swap agreements to finance the balance of payments deficit, and in particular to the sharp increase in the role of the Euro-currency in international finance. The BIS has had a significant impact on the coordination of the activities of the central banks of the OECD countries, the management of foreign exchange reserves and investments; he also played the role of the European Monetary Cooperation Fund agent and the Committee of Governors of the central banks of the member countries of the ECUS agreement (European coal and steel community). Until recent changes, the BIS Board of Directors consisted of central bank governors from Belgium, Germany, Italy, the Netherlands, Sweden, Switzerland, the United Kingdom and the United States, as well as six heads of branch departments of banks (trade, finance and industry).

Manual

The bank is managed by a board of directors, which includes managers of five central founding banks, each of which introduces one representative from the financial, industrial or trade communities of their country to the council. The positions of members of the board of directors can not be occupied by members of governments, legislatures or government employees, except for central bank governors.

The chairman of the council, his deputy and the president of the BIS are elected from among the members of the council for a period of not more than three years. The BIS apparatus includes: Banking (operational) management, Currency and economic management and Secretariat. Being an interstate institution, BIS operates on a commercial basis as a joint stock company paying dividends to shares . Since the 1960s. BIS became the center of many different agreements to maintain the European monetary system, and since the 1970s. acted as the holder of the funds of the European Fund for Monetary Cooperation ; he participates in calculations related to supporting exchange rates of the European Monetary System (EMS).

Directly regulating the activities of the BIS is its autonomous unit - Basel Committee on Banking Supervision (BCBN ). In particular, it defines the main criteria of international commercial banks. First, banks subject to the status of an international bank (IB) are limited in terms of the implementation of high-risk financial transactions in international capital markets. For example, if earlier MB could freely invest in shares or oil, now this practice is actually banned. Corresponding structures of banks (proprietary trades ), engaged in such operations in the MB, are subject to liquidation. Secondly, the MB is prohibited from having its own hedge funds. They were accused of speculative activities, which contributed to the globalization of the financial and economic crisis of 2008-2010. Thirdly, the reserve fund of international banks is increasing, a number of other measures of bank reliability have been introduced.

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