The Tower Of Basel
Based in Basel, Switzerland, the BIS was established as a way to ease the process for Germany to make their reparations payments to the Allies after the first World War. Shortly after its establishment, the Great Depression and accusations that the BIS had laundered money stolen by the Nazis led to demands to close the Bank. Yet, as no concrete date was set for its dismantlement, the bank survived and shifted its focus to a more general technical cooperation amongst banks. From managing the reparation payments, to paving the way for the introduction of the Euro, the current role of the Bank is now to act as a forum for central bankers to meet and to serve central banks for global financial stability. In other words, the BIS acts as a bank for central banks.
The BIS has only 140 customers, consisting mainly of financial institutions and private entities, and the 60 central banks it serves account for 95% of the of the world’s GDP. These shareholders include the Federal Reserve, Sveriges Riksbank, the Bank of Japan, the Bank of England and many other giants of the global economy
Aside from its elite exclusivity, what makes the BIS particular is its hybrid nature, with the status of an International Organization and the make-up of a commercial bank. The Bank is allowed to grant short-term credit to central banks, as well as to buy, sell and maintain gold on its own account. Its dual status benefits its operations and yields. The BIS was created based on an International Treaty and Swiss company law; the latter ensuring its inviolability. Even the Swiss authorities are not allowed to enter the Bank without permission from the BIS management, guaranteeing the Bank and its members complete autonomy.