Bank for International Settlement

8/3/2019 Bank for International Settlement

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PRESENTED BY:

PRIYANKA MANHAS

PRIYANKA BATISH

PUNEET GOYAL

RAVLEEN KAUR


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BIS


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INTRODUCTION TO BIS

The Bank for International Settlements (BIS) is an intergovernmental organization of central banks.

Based in Basel, Switzerland, the BIS was established by the Hague agreements of 1930.

It fosters international monetary and financial cooperation and serves as a bank for central banks.

It also provides banking services, but only to central banks, or to international organizations like

itself.


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The BIS also

act as agent or correspondent for any centralbank

arrange with any central bank for the latter toact as its agent or correspondent;

enter into agreements to act as trustee oragent in connection with internationalsettlements, provided that such agreements

will not encroach on the obligations of the BIStoward any third parties.


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FORMATION OF BIS BIS was formed with funding by the central banks of six nations- Belgium,

France, Germany, Italy, Japan, and the United Kingdom.

Three private international banks from the United States also assisted in

financing the establishment of the BIS.

When established, the BIS was responsible for the collection, administration

and distribution of reparations from Germany, after World War I.

The BIS was also the trustee for Dawes and Young Loans and to promote

central bank cooperation in general.


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CONTINUE After World War II, the BIS turned its focus to the defense and implementation of

the World Bank's Bretton Woods System The BIS has also emerged as an

emergency "funder" to nations in trouble, during Mexico and Brazil debt crises in

1982 and 1998.

The BIS has also functioned as trustee and agent from 1979 to 1994 for the

European Monetary System.

The BIS has always been a promoter of central bank cooperation in an effort to

ensure global monetary and financial stability.


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Departments of BISMonetary and Economic Department: Undertakes

research and analysis and organises key meetings to shapeunderstanding of policy issues concerning central banks.

Banking: Provides a wide range of financial services thathelp central banks pursue their goal of financial stability.

General Secretariat: Provides a comprehensive range ofcorporate services to the BIS, from facilities management tofinance, communications and IT.

Other units: Legal Service, Risk Control, Internal Audit,

Compliance and Operational Risk.


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OBJECTIVES

Regulates capital adequacy:The BIS's main role is in setting capital

adequacy requirements.

Encourages reserve transparency: Reserve policy is also important,

especially to consumers and the domestic economy.


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The Bank is Managed by Governors of

Central Banks of Belgium, France,Germany, Great Britain, Italy and U.S.A


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Role of BIS in Euro periphery Crisis

(Greece, Portugal and Spain)BIS urged tighter monetary policy

High interest rate

Proper policy makingThe BIS also coordinated short-term

lending to countries in financial crisis


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Financial statement of

BISThe BIS publishes audited annual financial statements

as at 31 March each year in its Annual Report, whichprovides a comprehensive overview and analysis of

the Bank's balance sheet and profit and loss account,together with other financial, capital adequacy and riskmanagement disclosures in line with internationalaccounting frameworks

It also publishes unaudited semi-annual financial

statements as at 30 September each yearThe BIS balance sheet amounted to SDR 249.6 billion

at 30 September 2011, a decrease of SDR 11.5 billionsince its financial year end in March 2011.


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Liabilities of BISThe size of the BIS balance sheet is in normal circumstances

driven by placements from customers.

On 30 September 2011, customer placements (excludingrepurchase agreements) amounted to SDR 210.6 billion,

compared with SDR 228.3 billion at the previous financial yearend in March 2011.

Around 90% of customer placements are denominated incurrencies, with the remainder in gold.

Currency deposits decreased from SDR 207.1 billion at 31March 2011 to SDR 189.4 billion at end-March 2011


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Assets of BISThe assets held by the BIS consist of

government and quasi-government securities,reverse repurchase agreements and investments

with highly rated commercial banks ofinternational standing.

The Bank owned 116 tonnes of fine gold at30 September 2011.

The Bank manages its credit exposure in aprudent manner, with more than 99% of theBank's credit exposure rated A- or higher as at30 September 2011.


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Bank OperationsBuying and selling of gold coin or bullion for its own

account or for the account of central banks.

Holding gold for its own account under reserve in centralbanks

Holding gold for its own account under reserve in centralbanks

Accepting the supervision of gold for the account ofcentral banks

Making advances to or borrowing from central banks

against gold, bills of exchange, and other short-termobligations of prime liquidity or other approved securities.


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Discounting, rediscounting, purchasing, or sellingwith or without its endorsement bills of exchange,checks, and other short-term obligations of primeliquidity.

Buying and selling foreign exchange for its ownaccount or for the account of central banksBuying and selling negotiable securities other

than shares for its own account or for the account

of central banksDiscounting for central banks bills taken from

their portfolio and rediscounting with centralbanks bills taken from its own portfolio

Opening and maintaining current or depositaccounts with central banks.Accepting deposits from central banks on current

or deposit account


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Accepting deposits in connection with trusteeagreements that may be made between theBIS and governments in connection withinternational settlements

Accepting such other deposits that, as in theopinion of the Board of the BIS


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Services of BISTo provide security, the Bank has built up a sizeable

equity capital and ample reserves. It pursues aninvestment strategy focused on combining diversification

benefits with intensive credit and market risk analysis.To ensure liquidity, the Bank stands ready to repurchase

its tradable instruments at little cost to its customers andthus respond quickly and flexibly to their needs.

The BIS offers an attractive and competitive return on the

funds deposited by central banks and internationalorganisations.


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Other servicesAsset management services :Fixed income portfoliosare:

invested in government bonds or high-grade credit securitiesstructured as dedicated portfolio mandates or BIS Investment Pool (open-

end funds)offered as either single currency or multi-currency mandates in the major

world reserve currencies

Foreign exchange and gold services :Servicesoffered are:

spot deals, swaps, outright forwards, options, FX-linked deposits foreign exchange overnight orders

safekeeping and settlements facilities available loco London, Berne orNew Yorkpurchases and sales of gold: spot, outright, swap or options


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Various Instruments of

BISBIS money market instruments:*Sight/notice accounts and fixed and floating-rate

deposits in most convertible currencies

Fixed-term deposits can also be denominated in andindex-linked to a basket of currencies such as the SDR

Standard and non-standard amounts and maturities


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BIS tradable instruments :

Issued in major currenciesAvailable in two forms: Fixed Rate

Investments at the BIS (FIXBIS) for anymaturities between 1 week and 1 year and

Medium-Term Instruments (MTIs) for quarterlymaturities from 1 year and up to 10 years

MTIs available also with an embedded callfeature (Callable MTIs)


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NEED OF BISContributing to international cooperation: BIS produces research and

statistics, and organizes seminars and workshops focused on international

financial issues.

Offering services to committees established and working at the BIS : BIS

also functions as an international "think tank" for financial issues through

various committees.


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CONTINUEIt provides gold and foreign exchange transactions for them

and holds central bank reserves.

The BIS is also a banker and fund manager for other

international financial institutions.


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Banking services offered by

BIS To Banking IndustryThe BIS offers a wide range of financial services.

BIS financial services are provided out of twolinked trading rooms: one at its Basel head office

and one at its office in Hong Kong SAR.The Bank continually adapts its product range in

order to respond more effectively to the evolvingneeds of central banks.

The Bank has developed a range of moresophisticated financial products which centralbanks can actively trade with the BIS to increasethe return on their foreign assets.


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The Bank also transacts foreign exchange andgold on behalf of its customers.

The BIS offers a range of asset managementservices in sovereign securities or high-gradeassets.

There is a specific portfolio mandatenegotiated between the BIS and a centralbank or an open-end fund structure - the BISInvestment Pool (BISIP) - allowing customers

to invest in a common pool of assets.The BIS extends short-term credits to central

banks, usually on a collateralised basis.


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CURRENT STATUS OF BISOutcome of the September 2011 Basel Committee meeting.

Assessment of the macroeconomic impact - report issued by the Basel

Committee and the Financial Stability Board.

Basel Committee announces Mr Wayne Byres as its next Secretary General.

The Basel Committee issues final rules for global systemically important

banks.

Banks' internal audit function - consultative paper issued by the Basel

Committee


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CONTINUE. Application of own credit risk adjustments to derivatives- basel committee

consultative document.

Consultative paper on revised "Core principles for effective banking

supervision" issued by the Basel Committee.

Consultative paper on "Principles for the supervision of financial

conglomerates" released by the Joint Forum.

Proposed regulatory capital disclosure requirements issued by the Basel

Committee.


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Restrictions on BISThe Bank may not: ...

* Make advances to Governments; ...

The bank also does not accept depositsfrom, or provide financial services to,private individuals or corporate entities.

ase omm ee on


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ase omm ee onBanking Supervision

The Basel Committee on Banking Supervision provides a forumfor regular cooperation on banking supervisory matters

Its objective is to enhance understanding of key supervisoryissues and improve the quality of banking supervisionworldwide

It seeks to do so by exchanging information on nationalsupervisory issues, approaches and techniques, with a view topromoting common understanding.

The Committee's work is organised under four main sub-committees:

The Standards Implementation GroupThe Policy Development GroupThe Accounting Task ForceThe Basel Consultative Group

omm ee on e o a


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omm ee on e o aFinancial System

The CGFS, formerly known as the Euro-currency Standing Committee, wasestablished in 1971 with a mandate to

monitor international banking markets

Its initial focus was on the monetary policyimplications of the rapid growth of off-shoredeposit and lending markets, but attentionincreasingly shifted to financial stabilityquestions and to broader issues related tostructural change in the financial system

omm ee on aymen


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omm ee on aymenand Settlement Systems

The Committee on Payment and SettlementSystems (CPSS) contributes to strengtheningthe financial market infrastructure through

promoting sound and efficient payment andsettlement systems.

The CPSS is a standard stetting body forpayment and securities settlement systems.


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CONCLUSION The BIS is a global center for financial and economic interests. As

such, it has been a principal architect in the development of the

global financial market. Given the dynamic nature of social,

political and economic situations around the world, the BIS can be

seen as a stabilizing force, encouraging financial stability and

international prosperity in the face of global changes.

Documents

Bank for International Settlement