Exploring the role of the Bank for International Settlements in global financial stability
Introducing the Bank for International Settlements or BIS: the central hub of global economic governance. Often referred to as the BIS, the Bank for International Settlements is the central hub of global economic governance and plays a key role in promoting financial stability around the world. It is also known as the "central bank of central banks". Founded in 1930 and based in Basel, Switzerland, the BIS acts as a bank for central banks and provides a platform for international monetary and financial cooperation. By bringing together policymakers and financial experts from its 63 member central banks, the BIS facilitates discussion and cooperation on monetary and financial policy issues and helps shape the global regulatory environment. Its member central banks include the Czech National Bank, the People's Bank of China and the Central Bank of the Russian Federation. A full list of member central banks can be found at the end of this article.
It aims to mitigate risks and promote sound macroeconomic management. It conducts in-depth research, publishes comprehensive reports and organises meetings and forums to promote dialogue and exchange of best practices among central banks and other financial institutions. By acting as a facilitator and catalyst for international cooperation, the BIS contributes significantly to the stability of global financial systems.
Its work helps to anticipate and address systemic problems and ensures that economies around the world are better able to withstand shocks and maintain strong financial stability.
The role of central banks in strengthening financial stability through the BIS
The Bank for the International Settlements is essential for strengthening international financial coordination and stability. It promotes cooperation between central banks and financial authorities, facilitating dialogue and information exchange, which helps to anticipate and resolve economic problems. The BIS conducts advanced research and analysis that provides insight into financial market trends and systemic risks and promotes cross-border cooperation and consistent regulatory practices. Its initiatives contribute to the standardisation of banking supervision and regulatory practices, exemplified by the Basel accords, which set benchmarks for capital adequacy, risk management and market liquidity. These efforts aim to minimise systemic risks and ensure that banks maintain adequate capital buffers. In addition, the BIS's role in economic surveillance includes monitoring global financial stability, collecting and analysing data and promoting discussions among financial authorities to address emerging threats. Through these activities, the BIS enhances the resilience and coherence of the global financial system and promotes a sound and safe economic environment worldwide.
Highlights of 2024
The Bank for International Settlements (BIS) continued to play a key role in shaping the global financial environment in 2024. The BIS, has focused strongly on promoting financial stability in a rapidly evolving economic environment.
In 2024, the Bank for International Settlements (BIS) has launched several initiatives to address the risks associated with digital currencies and fintech innovations, recognising their growing impact on the global financial ecosystem. By facilitating dialogue and research, the BIS has provided critical guidance on regulatory frameworks for managing these transformative technologies. In addition, the BIS has strengthened its supervisory capacity and emphasised the importance of macroprudential policies to anticipate and mitigate systemic risks. The institution has worked closely with global regulators to strengthen the financial safety net and ensure that liquidity and capital remain resilient to potential economic shocks.
With rising geopolitical tensions and financial risks associated with climate change, the BIS has promoted sustainable financing practices and encouraged central banks to incorporate environmental considerations into their policy frameworks. Overall, the BIS's efforts in 2024 highlighted its vital role in ensuring international economic stability.
One of the highlights has been the BIS's work on central bank digital currencies (CBDCs). The institution has launched a pilot initiative, Project Atlas, which aims to create a single framework for cross-border CBDC transactions. The aim of this effort was to streamline international payments, reduce costs and increase transparency of global trade.
The BIS also highlighted regulatory measures for the emerging cryptocurrency sector. It presented guidance for central banks on assessing the risks associated with decentralised funding platforms (DeFi) and argued for a balance between innovation and security.
The BIS has further deepened its commitment to climate finance. It issued a comprehensive report on green investment strategies, encouraging central banks to integrate environmental considerations into monetary policies.
The BIS Innovation Centre has expanded its collaboration with fintech companies and focused on artificial intelligence and data analytics to modernise banking systems. These initiatives reflect BIS's proactive approach to addressing the challenges and opportunities of a transforming global economy and position it as a leader in financial innovation and stability.
Who runs the Bank for International Settlements?
The Bank for International Settlements (BIS) is governed by a management structure consisting of a Board of Directors and a Managing Director. The Board of Directors includes central bank governors and other senior officials of member banks from around the world, reflecting the diversity of the international composition.
On their official website, it says: "The Board of Directors can have up to 18 members, including six ex officio directors made up of the governors of the central banks of Belgium, France, Germany, Italy, the United Kingdom and the United States. They may jointly appoint one additional member who is a national of one of their central banks. Eleven Governors of the other Member Central Banks may be elected to the Board of Directors."
This structure allows the BIS to effectively coordinate and facilitate cooperation between central banks around the world. A Managing Director appointed by the Board of Directors oversees day-to-day operations and implements the strategic direction set by the Board of Directors. This governance ensures that the BIS plays a key role in promoting global financial stability through its various functions and initiatives.
The current members of the Board of Directors are:
You can see more for yourself on its official website: bis.org/index.htm
List of member central banks:
Bank of Algeria
Central Bank of Argentina
Reserve Bank of Australia
Oesterreichische Nationalbank, the Austrian Central Bank
National Bank of Belgium
Central Bank of Bosnia and Herzegovina
Central Bank of Brazil
Bulgarian National Bank
Bank of Canada
Central Bank of Chile
People's Bank of China
Central Bank of Colombia
Croatian National Bank
Czech National Bank
Danmarks Nationalbank (Denmark)
Bank of Estonia
European Central Bank
Bank of Finland
Bank of France
Deutsche Bundesbank (Germany)
Bank of Greece
Hong Kong Monetary Authority
Magyar Nemzeti Bank (Hungary)
Central Bank of Iceland
Reserve Bank of India
Bank Indonesia
Central Bank of Ireland
Bank of Israel
Bank of Italy
Bank of Japan
Bank of Korea
Central Bank of Kuwait
Bank of Latvia
Bank of Lithuania
Central Bank of Luxembourg
Central Bank of Malaysia
Bank of Mexico
Bank Al-Maghrib (Central Bank of Morocco)
De Nederlandsche Bank
Reserve Bank of New Zealand
National Bank of the Republic of North Macedonia
Central Bank of Norway
Central Reserve Bank of Peru
Bangko Sentral ng Pilipinas (Philippines)
National Bank of Poland (Poland)
Banco de Portugal
National Bank of Romania
Central Bank of the Russian Federation
Saudi Central Bank
National Bank of Serbia
Monetary Authority of Singapore
National Bank of Slovakia
Bank of Slovenia
South African Reserve Bank
Bank of Spain
Sveriges Riksbank (Sweden)
Swiss National Bank
Bank of Thailand
Central Bank of the Republic of Türkiye
Central Bank of the United Arab Emirates
Bank of England
Board of Governors of the Federal Reserve System (United States)
State Bank of Vietnam
George
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