Chapter 3 The Role of the BIS in International Monetary Cooperation and Its Tasks Relating to the ECU

Abstract

The Bank for International Settlements (BIS), founded in 1930, is the oldest international organization in the field of international monetary cooperation. Its creation represented the materialization of various plans dating from the period prior to the First World War. At that time, the former Italian Finance Minister, Luzzati, and a German professor named Wolf proposed setting up a multilateral body whose task would be to promote cooperation between central banks on a permanent basis. Prior to this, there had been some history of cooperation between central banks, although on an ad hoc, and usually only a bilateral, footing. The earliest case of support between central banks seems in fact to have occurred in 1825, when a loan was granted to the Bank of England by the Bank of France and the Netherlands Bank. The international economic conference held in Genoa in 1922 took up the ideas of Luzzati and Wolf, and recommended developing the practice of permanent cooperation between the central banks or banks entrusted with the monitoring of credit policy in the various countries. Ultimately, however, it was the deadlock reached on the question of German reparations in 1930 which proved the catalyst for the realization of these long-standing plans. It was thought that one institution, whose principal and permanent role would be to promote cooperation between central banks, might also—as its first, temporary mission—channel the international settlements connected with the German reparations. Hence the name by which our Basle institution is known—a name which scarcely conveys the range of its activities.