# The Bank for International Settlements

The world's oldest international financial institution and the central bankers' bank: founded to handle German reparations, entangled in the wartime gold controversy, nearly abolished at Bretton Woods, and reborn as the forum where the world's central banks coordinate and write the Basel rules.

*This story part of: Money and finance*
*Princes of the Yen: Japan built, bubbled, and broken parallel this story*

## 7 June 1929 — The Young Plan for German reparations

A committee chaired by American businessman Owen D. Young produced a plan to reorganize Germany's World War I reparations. The plan proposed a new international bank to handle the payments, which became the Bank for International Settlements.

## 17 May 1930 — Basel base and legal immunities

The BIS was based in Basel and given unusual legal protections under a host agreement with Switzerland. Its premises, assets, and archives are largely immune from Swiss jurisdiction, taxation, and search, which later drew both scholarly and conspiracy-minded attention.

## 17 May 1930 — Founding of the Bank for International Settlements

The BIS opens in Basel, created to handle German war reparations under the Young Plan. It survived as the bank for central banks and the oldest international financial institution.

## 17 May 1930 — The United States stays out officially while private banks join

The Federal Reserve did not formally join the BIS because the Hoover administration opposed official involvement in reparations. American participation came instead through private banks led by J.P. Morgan and two large national banks.

## 21 March 1939 — Transfer of Czechoslovak gold through the BIS

After Germany occupied Czechoslovakia, the BIS acted on instructions to move gold held for the Czech National Bank into an account controlled by Germany's Reichsbank. The episode became the most documented controversy about the bank's wartime conduct.

*Source: Searching for Records Relating to Nazi Gold: Part I*

## 1 January 1940 to 1945 — The BIS keeps operating under wartime pressure

With American Thomas McKittrick as president, the BIS stayed open throughout World War II while much of its board and business were tied to Axis powers. Critics later charged that it handled looted gold and served German interests, while defenders said it preserved a neutral channel among central banks.

*Source: Lords of Finance*

## 22 July 1944 — Bretton Woods calls for the BIS to be abolished

Delegates at the Bretton Woods Conference passed a resolution urging that the BIS be wound up at the earliest possible moment, partly over its wartime record. The recommendation was never carried out and the bank survived.

## 1 July 1950 — The BIS survives and shifts to monetary cooperation

Instead of being abolished, the BIS took on new work as reparations faded from view, including acting as agent for the European Payments Union that helped rebuild trade after the war. It grew into the main forum where central bank governors met and coordinated.

## 1 October 1962 — Formation of the Group of Ten

Leading industrial countries formed the Group of Ten to support the international monetary system, and much of its work centered on the BIS in Basel. The bank became the regular meeting place for the governors of the major central banks.

## 1 December 1974 — Founding of the Basel Committee on Banking Supervision

After the collapse of Germany's Herstatt Bank exposed cross-border settlement risks, central bank governors of the Group of Ten set up the Basel Committee on Banking Supervision at the BIS. It became the main body for writing common rules on bank safety.

## 15 July 1988 — Basel I sets the first global capital standard

The Basel Committee issued Basel I, the first international standard requiring banks to hold minimum capital against their risks. It set a common benchmark that spread to banking systems around the world.

## 9 September 1996 — Membership expands to central banks worldwide

The BIS opened its membership to many more institutions, bringing in the central banks of large emerging economies including China, India, and Russia. Membership grew past 60 central banks and monetary authorities, well beyond the original European and American core.

## 26 June 2004 — Basel II revises the capital rules

The committee released Basel II, a more detailed framework that let banks use their own risk models and added supervision and disclosure requirements. The reliance on bank models later drew criticism after the financial crisis.

## 15 September 2008 — The 2008 financial crisis exposes gaps in the rules

The global financial crisis revealed that banks were undercapitalized and short of liquidity despite the Basel standards. The failures pushed regulators to tighten the framework.

## 16 December 2010 — Basel III tightens capital and liquidity rules

In response to the crisis, the Basel Committee agreed Basel III, which raised the quality and amount of required capital and added new rules on liquidity and leverage. Its later stages and national versions remain the subject of active debate.