University of Pennsylvania Journal of International Economic Law
Bank for International Settlements, BIS, International Monetary Fund, IMF, electronic banking, international settlement
The Bank for International Settlements ("BIS") was set up in Basel, Switzerland in 1923 to handle remaining financial issues from World War II largely having to do with German reparation payments. It was the first of the semi-public international banks. Over the years its functions have changed and, largely since the late 1970's, it has served as the situs for the world's central banks and financial regulators to pool ideas and deal with international financial issues. A group of committees, com- posed largely of representatives of central bankers, now meets at BIS and has been issuing memoranda and drafts of regulations on a number of subjects affecting international banking. Among these are the regulation of capital, the management of international conglomerates, and problems resulting from electronic banking. Problems in world banking have sensitized observers to the absence of coordinated regulation and to the need for some form of unified control. That there is a need for one international bank regulators increasingly acknowledged. BIS comes closer than any other organization to fulfilling this function. The International Monetary Fund ("IMF") comes close but is too politicized and has been too involved in attempting to meet a continuing series of crises to do any long range thinking. Only BIS has attracted the intellectual resources to analyze and resolve international problems in a thoughtful and deliberate manner. Only BIS output is being adopted in the world's banking centers. BIS has been proposed as a world senior financial regulator. This article acknowledges the rationale for such a decision but argues that now is not the time for such an attempt. Banking is, of course, conducted locally even though its reach is international. To anoint any body as a senior regulator with the power to impose rules would require massive compromises among national regulators to achieve one central set of rules. It would also involve an abdication of measures of sovereignty by the constituent states. An effort of this kind would risk destroying the whole concept. Rather than start such a bold stroke at such an inopportune time, this Article argues that the international banking world would fare far better assisting BIS to proceed down the current track. As it continues to mature, and as its edicts are increasingly accepted throughout the world it will continue to approach its rightful place as the world's bank regulator.
25 U. Pa. J. Int'l Econ. L. 945 (2004)