The Bank for International Settlements: Evolution and Evaluation

The Bank for International Settlements: Evolution and Evaluation

The Bank for International Settlements: Evolution and Evaluation

The Bank for International Settlements: Evolution and Evaluation

Synopsis

The oldest existing international financial institution and probably the most controversial, The Bank for International Settlements remains a mystery to many people and to others, an ethical enigma. It has contributed significantly to international bank regulation and to stabilizing the international financial system, yet its operations during World War II have long been deemed suspect. Indeed, some use the word "shady." Baker discusses the history and evolution of The BIS, evaluates its operations, and in a fair balanced treatment weighs the good it has done against the bad. He describes its work on payment/settlement systems, derivatives, bank capital, and in the insurance and investment industries, and underlines how it has changed since the days when it was accused of assisting the Nazis' war effort. A major academic study, the book will be of special interest not only to teachers, scholars, and students, but to finance and investment professionals as well.

Excerpt

This monograph is a study of the Bank for International Settlements (BIS) and its evolution, administration, operations, and evaluation. the bis is the oldest international financial institution, having been established in 1930. It survived the conclusion of its major initial objective, a global economic depression, a world war, and an everchanging international monetary and financial system in which major banks have failed, banks in general have been inadequately capitalized, financial derivative instruments have been misused, currency crises occurred in Asia, Europe, Mexico, and Russia, the U.S. dollar was devalued twice within two years, and charges of laundering gold for the Nazis in World War II have been made against the bis.

The principal hypothesis of this book is that, enigma that it may be, the bis is the only financial institution which could have accomplished what it did over its seven decades of existence. It has brought some semblance of stability to the international monetary and financial systems and to international banking, specifically by formulating rules for banking authority responsibility when foreign affiliates of a bank fail and for maintenance of more adequate capital by banks with a means to account for riskiness of their assets. It has studied other global financial issues and promulgated proposals in the areas of financial derivative instruments, payment and settle-

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