Today’s world of business is in an environment of borderless finance. The volume of international financial transaction has increased significantly during the past few decades.
World trade and investment is now measured in the trillion. Banks are becoming larger and
more sophisticated as a result of cross – border merger and acquisition activity and
innovations in electronic technology. All of this growth has produced four developments
which have significantly affected international commerce.
These global changes are :
(1) A speeding up of cross border capital flows,
(2) Overpowering in new challenges in emerging markets,
(3) Growing power of capital market and
(4) New challenges for risk management.
Theses global changes in the international financial system require regulation and
oversight that is global instead of the national central banking supervision within a
country’s border. The new international financial system requires an international agency
which can coordinate the activities of national banking regulatory and supervisory bodies.
The bank for International Settlement (BIS) is such an agency. The Bank for International
Settlements (BIS) is an international organization which develops international monetary
and financial cooperation and serves as a bank for central banks. Its head office is located
in Basel, Switzerland and there are two other offices: in the Hong Kong Special
Administrative Region of the People’s Republic of China and in Mexico City. It was
established on 17 May 1930, the BIS is the world’s oldest international financial
organization and was created to administer the transaction of taxes according to the
Treaty of Versailles. The BIS currently employs around 550 staff from 50 countries.
Its customers are central banks and international organizations, the BIS do not accept
deposits from, or provide financial services to, private individuals or corporate entities. The
BIS strongly advises caution against false schemes. Among others, its main goals are to
promote information sharing and to be a key center for economic research. Essentially, the
BIS is a central bank for central banks; it does not provide financial services to individuals
or corporations. The BIS is located in Basel, Switzerland, and has representative offices in
Mexico City and Hong Kong. Member banks include the Bank of Canada, the Federal
Reserve Bank and the European Central Bank.