Kim Hyunjung Kim Jeeyoung Hur Se Won Yun Hankyoung Song Wei

1. Bank for International Settlements - Organizational Assessment Kim Hyunjung Kim Jeeyoung Hur Se Won Yun Hankyoung Song Wei International Economic Organizations Spring Semester 2006 Prof. Moon Hiwhoa

2. What is BIS? • The central bank’s bank • Founded in 1930 • Operating under the mandates of international law • Fostering cooperation among central banks and other agencies in pursuit of monetary and financial stability • Headquartered in Basel, Switzerland • Two representative offices in Hong Kong and Mexico city “Tower" building Centralbahnplatz 2, Basel, Switzerland

3. Organization and Operating structure • The General Meeting of Member Central Bank • Currently 552 staff from 49 countries • Three most important decision-making bodies • The Board of Directors • The Management of the Bank • The General Meeting of Member Central Bank • The Board of Directors • The Management of the Bank

4. Organization and Operating structure • The General Meeting of Member Central Bank • Annually late Jun./ early Jul. • Currently 55 member central bank entitled to be represented and vote in the General Meeting • Voting power is proportionate to the number of BIS shares • Focus on: - Distribution of the dividend and profit - Approval of the ann. report, and the accounts of the Bank - Adjustments in the allowances paid to Board members - Selection of the Bank’s external auditors • The Board of Directors • The Management of the Bank

5. Organization and Operating structure • The General Meeting of Member Central Bank • Six ex officio directors: - Five governors of the central banks - The Chairman of the Board of Governors of the US Federal Reserve System • Each ex officio membermay appoint another member of the same nationality • Responsible for: - Determining the strategic and policy direction of the BIS - Supervising the management - Fulfilling the specific tasks • The Board of Directors • The Management of the Bank

6. Organization and Operating structure • The General Meeting of Member Central Bank • the General Manager : (Malcolm D KNIGHT) • The Board of Directors • The Management of the Bank - Carrying out the policy by the Board of Directors - Being responsible to the Board for the management of the Bank

7. Goals and Objectives A forum to promote discussion and policy analysis among central banks and within the international financial community A center for economic and monetary research Agent or trustee in connection with international financial operations A prime counterparty for central banks in their financial transaction

8. Key Activities Arranges Acts Arranges Arranges Holds international forums and meeting for central banks and its senior officials Serves

9. Key Activities Acts Holds Acts Acts Serves as a center for monetary and economic research - a hub for sharing and publishing statistical information Arranges

10. Key Activities Holds Serves Holds Holds Arranges seminars and workshops designed to disseminate recent work undertaken by the supervisory community Acts

11. Key Activities Serves Arranges Serves Acts as a financial consultant, assisting central banks and other official monetary institutions in managing their foreign reserves Holds

12. Priority Issues • Two major features-lower and less volatile inflation - growing external and internal ‘imbalance’ • Due to the structural changes 1. the spread of liberalization throughout the global economy 2. the development of a more complete financial market 3. the increased focus of central banks on low inflation • Suggestions : through an evolutionary adaptation of current policy framework, both the domestic and international macro-financial stabilization framework need more systematic attention.

13. BIS Capital Adequacy Ratio • BIS capital adequacy ratio indicates the solvency of a bank • BIS ratio = risk bearing capital / risk-weighted assets • Banks are regarded as “healthy” when the ratio goes above a prescribed minimum international standard, 8 percent. 6.16% ? 9.32% !!!

14. Weakness of BIS Ratio Current related issue : the suspicion against Lone Star of fabricating the data of Korean Exchange Bank

15. Evaluation and Criticism • Positive evaluation on… • keen prediction about regional and national economic crisis in the world. (e.g. the downturns of the Mexican peso and Asian currency crises of the 1990s) • a sound record of being accurate in its economic forecast. • efforts toward any Y2K computer problems

16. Evaluation and Criticism • Criticism on… • Unsuccessful relief results of the work with other organizations: the economic crises of Asia, Latin America, and Russia. • The connection of Wall Street creditors : especially in the case of Brazilian economic problems of the 1990s. • The secrecy of the organization

17. Continuation of its effort to improve the efficiency and stability of the international monetary and financial system 1. Illegal money laundering within the international financial system 2. the hedge fund/reinsurance firm connection 3. the use of captive offshore insurance firms 4. the absence of financial transparency in company and bank operations Developing ability to cope with innovations in financial system Promoting new rules for financial supervisory authorities Finding a solution to the secrecy issue Future Development

18. Conclusion • The BIS, as a principal architect in the development of the global financial market, carries out its aims and functions though encouraging financial stability and international prosperity in the face of global change. • BIS’s leading attempts establish harmonized international financial reporting standards as providing consolidated banking data as a source of market-share information . • Greater Emphasis on disclosure of risk profiles of individual financial institutions

19. THANK YOU