Anyone who reads the annual reports of the Bank of International Settlements (BIS) will always be impressed by the quality of its research and analysis, yet if you ask most who have read these reports what does the BIS actually do, you will not get a very clear answer.
It is the bank to central banks, but what does that mean? Cannot central barks work with each other or through other world organizations like the IMF or the World Bank? The answer is that since the early post WWI period, the BIS has played an important role in moving central bank capital and facilitating transactions for central banks. The BIS has always taken the view that their job is to help with these transaction without any consideration of the greater global or ethical considerations. The ethical ethos is that the bank will follow the rules of facilitating the needs of their client institutions even when it has been for the benefit of what most would consider illegitimate regimes like Nazi Germany. It has worked in the shadows and without much oversight. Run by technocrats for the benefit of other banking technocrats.
Adam Lebor provides a fascinating history of the bank. Something which many would like to whitewash. The questions is whether the sins of past should affect our views of the present. It is hard to say, but the more pressing issue is whether in the current global environment we should have institutions that do not have accountability to some higher government authority. Is global finance too important to be left to democratic governments or should the general populous through their elected officials controls these institutions?
Market discipline has to be imposed even on central banks, but by whom and for whom?
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