Explain the History of Bank for International Settlement


The BIS was formed in 1930, the main actors in the establishment of the BIS were the
then Governor of The Bank, of England, Montagu Norman and his German colleague
Hjalmar Schacht, later Adolf Hitler’s finance minister.

The Bank was originally intended to facilitate money transfers arising from settling an
obligation arising from a peace treaty. After World War I, the need for the bank was
suggested in 1929 by the Young Committee, as a means of transfer for German
reparations payments (see Treaty of Versailles). The plan was agreed in August of that
year at a conference at The Hague, and a charter for the bank was drafted at the
International Bankers Conference at Baden in November. The charter as adopted at a
second Ha.gpe Conference on January 20,1930.
During the period 1933-45, the board of directors of the BIS inc u e Walter Funk a
prominent Nazi official, and Emil Puhl, who were both convicted at the Nuremberg trials
after World War II, as well as Herman Schmitz the director of IG Farben and Baron von
Schroeder, the owner of the J.H.Stein Bank, the bank that held the deposits of the
Gestapo. There were allegations that the BIS had helped the Germans loot assets from
occupied countries during World War II.
The BIS was originally owned by both the governments and private individuals, since the
United States and France had decided to sell some of their shares to private investors. BIS
shares traded on stock markets, which made the bank a unique organization: an
international organization (in the technical sense of public international law), yet with
private shareholders. Many central banks had similarly started as such private institutions,
for example the Bank of England was privately owned until 1946. In more recent years the
BIS has forcibly bought back all shares held by private investors, and is now wholly owned
by its member central banks’.
Since 2004, the BIS have published its accounts in terms of Special Drawing Rights, or
SDRs, replacing the Gold Franc as the bank’s unit of account. As of March 20071updatel
(end of month) the bank had total assets of $409.15 billion, given a dollar/SDR exchange
rate of 1.51 for March 30, 2007. Included in that total were 150 tons of fine gold.

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