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Leonard Seabrooke
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To cite this article: Leonard Seabrooke (2006): The Bank for International Settlements, New
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GLOBAL MONITOR
The Bank for International Settlements
LEONARD SEABROOKE
The Bank for International Settlements (BIS) is the proverbial ‘IT staff’ of the
global economy. While other international economic institutions are highly
visible, the BIS remains mostly out of the public eye while it weaves a set of
rules, norms and decision-making procedures that establish governance structures
for both public and private international banks. Without the BIS, information
sharing among central banks and private ﬁnancial institutions would be seriously
troubled. These institutions would face severe information asymmetries, their
assessments of creditworthiness would be harder to establish, and the effective
management of currency crises would be more difﬁcult to achieve. In an environment
where average daily turnover in foreign exchange markets is now US$1.9
trillion, and the market for investment risk protection alone is worth US$4.5
trillion per year, the BIS’s ‘ﬁrewalls’ are important to prevent the global ﬁnancial
system from being, as it were, ‘spammed’.1
Yet, like our lack of understanding of
how the IT staff is (most of the time) able to prevent the e-mail system from crashing
or our ﬁles being wiped, most of us don’t know exactly what the BIS does to
provide us with the networks that allow global ﬁnance to run smoothly (at least
most of the time).
Known as the ‘Bank of Central Banks’, the BIS’s original charge in 1930 was to
‘promote the co-operation of central banks and to provide additional facilities for
international ﬁnancial operations; and to act as a trustee or agent in regard to international
ﬁnancial settlements entrusted to it under agreements with the parties con-
cerned’.2
Today, the BIS still provides an institutional space for the sharing of
information among central bank governors, but it is equally concerned with the
development of international banking regulation and the collation and dissemination
of ﬁnancial data to international ﬁnancial institutions and private ﬁnancial
market actors. This Global Monitor report provides an overview of the purposes
and functions of the BIS and the Basle Committee on Banking Supervision, as
well as contemporary problems and debates in international cooperation for ﬁnancial
regulation. The report provides a description of the BIS’s institutional
New Political Economy, Vol. 11, No. 1, March 2006
Leonard Seabrooke, International Center for Business and Politics, Copenhagen Business School,
Steen Blichers Vej 22, 2000 Frederiksberg, Denmark.
ISSN 1356-3467 print; ISSN 1469-9923 online=06=010141–9 # 2006 Taylor & Francis
DOI: 10.1080=13563460500494982
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characteristics, a lightning summary of how the institution was transformed
between the 1930s and 1980s, a discussion of the formation of ‘Basle Accords’,
and an examination of the BIS’s recent efforts to build networks for monitoring
and surveillance at the individual, regional and international levels. Finally,
the report reﬂects on how we may think of this unique institution within the
broader context of academic debate concerning how international economic
institutions can reconﬁgure actors’ ideas and interests.
Nuts and bolts of an international ‘quango’
The BIS was established as an international economic institution that is separate
from the ﬁscal obligations of any country, but is also a limited-liability
company under Swiss law.3
The BIS may therefore be understood as something
of an intergovernmental ‘quango’ (quasi-non-governmental organisation), in
that it acts as a service provider of public goods that is underwritten by its shareholding
central bank members.4
As such, the BIS has the capacity to act on behalf
of any central bank and as a trustee to facilitate international settlements, but
claims against it are limited. A further purpose of the BIS’s limited liability
status is to afﬁrm that its function is not economically redistributive, like the
World Bank or the International Monetary Fund (IMF), but to provide technical
knowledge and banking services.
The institution is based in Basle, Switzerland, and is governed by a Board of
Directors that is chaired by a central bank governor of one of the BIS member
states. The original Board of Directors was established by the governors of its
founding central banks (Belgium, United Kingdom, France, Germany and Italy,
with banking conglomerates from Japan and United States of America), with
each governor appointing a second representative of the same nationality from
private industry to afﬁrm the bank’s standing in the capitalist system. The
Board can also elect up to nine other governors from shareholding banks, although
until recently only representatives from the Netherlands, Sweden and Switzerland
were included.5
In addition to in-house governance, the BIS holds annual general
meetings that bring together representatives from central banks and international
economic institutions. In 2005 more than one hundred central banks attended.
However, only shareholding member central banks, currently numbering 55,
have a right to vote on decisions.
The BIS uses the IMF currency, Special Drawing Rights (SDRs), for all trans-
actions.6
As of March 2005, the BIS held total assets of SDR 180,486 million
(US$275,060 million, of which time deposits and advances to banks made up
44 per cent, while Treasury bills were 17.3 per cent), and total liabilities of
SDR 170,233 million (US$259,435 million, of which 88 per cent are currency
deposits). Because the BIS functions as a working bank for central banks, it
funds itself through its trading activities. Between 1993 and 2005, it distributed
13–31 per cent of its net proﬁts through dividends to its shareholders, who are
central banks that may re-sell their shares to the general public while retaining
formal ownership.7
The BIS currently employs 560 staff from 49 different countries, the vast
majority of which are located within the internal bureaucracy and the BIS’s
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main ofﬁcial arms, the Monetary and Economic Department and the Banking
Department.8
In addition, the BIS now incorporates a Legal Service and
Compliance, Internal Audit and Risk Control units, reﬂecting both concerns
with offering better representation to a larger group of member central banks,
and the growing trend among international economic institutions to demonstrate
their own transparency. In addition to these units, the BIS has its own Financial
Stability Institute (FSI) and BIS Representative Ofﬁces for regional trading
operations in Hong Kong and Mexico City. The BIS also acts as a ‘host’ for the
Financial Stability Forum, the International Association of Insurance Supervisors
and the International Association of Deposit Insurers.
Formally, the Board of Directors sit on Executive, Audit and Consultative committees
to determine BIS policy directions. However, the BIS is better known for
its ‘voluntary policy arms’, its committee systems that have no international legal
enforcement capacities but which shape the character of the global ﬁnancial order.
These committees are, respectively, the Basle Committee on Banking Supervision
(BCBS), the Committee on Payment and Settlements Systems (CPSS), the
Committee on the Global Financial System (CGFS, called the Euro-currency
Standing Committee prior to 1999) and the Markets Committee. The CGFS and
the Market Committee provide an important monitoring function.9
Among the
committees, by far the most prominent is the BCBS, which produced the ‘Basle
Accords’ of 1988 and 2004. Since 1974 the committee has met four times a
year and comprises representatives from the central bank and key prudential
bank regulators from the Group of Ten (G10).10
More generally, the G10 is involved
in discussions concerning economic trends and global ﬁnancial architecture.
Evolution: from banking reparations to repairing commercial banks
The BIS’s original purpose was to assist in overcoming the collective action
problem concerning German reparations payments.11
During the 1930s, the BIS
provided emergency ﬁnancing to German and Austrian central banks, but soon
shifted the focus to coordinating credit networks among central bank governors
of its member states. During the 1950s and 1960s, the BIS created currency
swap networks to support the Bretton Woods monetary regime, as well as providing
emergency currency support to France, Italy and the UK.
After the collapse of the Bretton Woods monetary regime, the BIS responded to
new developments in the global ﬁnancial order by providing new regulatory standards
for internationally active commercial banks. Following commercial bank
collapses from currency speculation in 1974, the BIS developed the G10 BCBS,
originally established as the Basle Committee on Banking Regulations and Supervisory
Practices. This committee sought to create new standards and safeguards
for central banks, national prudential regulators and commercial banks in order
to provide a ‘normalisation’ of ﬁnancial markets.12
Of particular concern to the
BCBS was the growth of syndicated international bank lending, where a
number of banks held a part of the loan to diversify their risks in an otherwise
lucrative business. Such activities led to ‘overlending’ to fragile economies
(80 per cent of recipients were the governments of developing states), while at
the same time banks were depleting the resources in case of default. The largest
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US banks, for example, halved their ‘capital adequacy ratios’ in the late 1970s.
The BIS warned that crisis was imminent, a prediction that was soon borne out
by events. The experience of the Debt Crisis demonstrated the need for a more
intensive regime on international banking that would require banks to put some
capital aside for a rainy day.13
The Basle Accords
The basic idea of the Basle Accords is neatly surmised by Kenneth Rogoff: ‘so
bank managers will not be able to make one-way bets: that is, risky loans pay
off, the bank wins big, and if they do not the taxpayer foots the bill for paying
off the depositors’.14
In response to the Debt Crisis there was a loose consensus
that there should be new regulations to ensure that international banks had
capital adequacy and that they did not fall into ‘moral hazard’ traps. The Bank
of England and the US Federal Reserve held discussions on how to tackle this
problem that established the groundwork for a new BIS accord and satisﬁed
their mutual interest in hobbling Japanese bank competitiveness. The European
Community also provided their internal regulations on banking soundness that
arguably forced the US’s hand. Either way, the BCBS provided extensive negotiations
between G10 central bank governors and formulated the ‘International
Convergence of Capital Measurement and Capital Standards’ of 1988.15
This
‘Basle Accord’ (‘Basle I’) required international banks to hold 8 per cent of
their capital aside as a safeguard in case of ﬁnancial crises. Half of this ‘regulatory
capital’ was to be core capital (equity plus disclosed reserves) and the other half
‘supplementary capital’ that passed through a bank’s proﬁt and loss account. The
safest type of capital to hold was determined by the BIS to be Organisation for
Economic Cooperation and Development (OECD) government debt. To meet
Basle Accord standards by the 1992 deadline, commercial banks purchased
some US$150 billion in government securities, of which US Treasury debt was
the most liquid.16
As a consequence, Basle Accord I was a ﬁscal windfall for
the US.
By 1992, 130 countries had adopted, in principle, the Basle Accord standard
despite the lack of a formal enforcement mechanism from the BIS and BCBS.17
Within OECD countries implementation was rigorous, with international
markets providing extra reinforcement by placing premiums on the trading
operations of non-compliant banks (as happened to many Japanese banks in the
mid-1990s).18
Adoption of the accord, however, reﬂected both the simplicity of
the regulations and how far removed ﬁnancial practices were from its constraints.
Even in 1986 the BIS recognised that, following the Debt Crisis, syndicated bank
lending had died and banks were rapidly going through a process of ‘disintermediation’
and off-balance securitisation.19
The increasing practice of removing
assets from a bank’s balance sheet through the use of innovative debt securities
made the Basle I’s assessment of risks held by banks out of touch with market
practices. In 1996 the BCBS made amendments to Basle I to incorporate
market risks, with banks using their own internal risk assessment models.20
US
regulators favoured this method of risk assessment, where institutions could
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‘precommit’ their capital adequacy ratios according to internal assessments. The
UK and the European Union, however, called for stronger formal standards.21
In 1999 BCBS proposed that a new accord was required to increase ‘competitive
equality’ among internationally active banks, particularly as US banks –
which were most heavily engaged in disintermediation – were able to have
more capital at work than was reﬂected in their ofﬁcial capital adequacy
ratios.22
In addition to the credit risks (prospect of default) on traditional
banking loans, the new accord would tackle market risks (from changes in interest
and exchange rates and equity and commodity prices) and, importantly, operational
risks (‘the risk of direct or indirect loss resulting from inadequate or
failed internal processes, people, and systems, or from external events’).23
The
key obstacle for the new accord was to reconcile a standardised method among
all banks with sufﬁcient leeway in internal risk assessment. Given the continuation
of national and regional divergence in banking systems, the BCBS’s task was
particularly arduous.
In June 2004 the BCBS released the ‘International Convergence of Capital
Measurement and Capital Standards: A Revised Framework’, commonly referred
to as ‘Basle II’. The new accord is built upon three pillars. Pillar I states that banks
must hold at least 8 per cent of ‘regulatory capital’ (their capital adequacy) in
relation to their risk weighted assets. Pillar II sets supervisory standards within
banks. Pillar III emphasises public disclosure of a bank’s ﬁnancial position to
allow market forces to discipline institutions.
Most of the recent attention and debate has focused on the standardised
approach within Pillar I’s risk weightings. Here, risk is assessed by BIS internal
assessment and by credit rating agencies (CRAs), with ‘AAA’ ratings receiving
20 per cent, with scales of 50 to 100 per cent on A grade variations until ‘B’
ratings receive a weighting of 150 per cent of committed capital. So, to take an
example, if a bank lent $1 million to a corporation with a rating of ‘AAA’, it
would have to put aside $16,000 (8 per cent of 20 per cent of $1 million), while
if it lent the same amount to a company in a developing country with a ‘B’
rating, it would need to put aside $120,000 (8 per cent of 150 per cent of $1
million). Understandably, the accord is criticised for being biased against developing
countries, as well as for its reliance on ‘impartial’ CRAs.24
Basle II also provides an ‘internal rating-based’ (IRB) approach as an alternative
to the Pillar I standardised approach. Here, the bank is required to assess
each borrower’s creditworthiness (the ‘KYC’ – ‘know your customer’ –
approach) to predict future losses and then use regulatory benchmarks or historical
records of loss on loans as a risk weighting.25
Basle II compliance therefore
requires banks that are not already up to speed to invest heavily in staff and technology
to improve their customer creditworthiness assessment. As a consequence,
US regulators and banks complain that the new accord imposes
unnecessary costs on some of the most competitive ﬁnancial instruments and
ﬁnancial institutions, such as asset-backed securities held by small- to
medium-sized banks (95 per cent of US banks are in this category).26
The
biggest losers from the accord, however, are developing countries who have
little capacity to provide the monitoring infrastructure to reduce risk weightings
for themselves and their clients.27
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Networks for micro- and macro-prudential regulation
From the mid-1990s onwards, the BIS has asserted the need for micro- and macroprudential
regulation within the global ﬁnancial order.28
Micro-prudential
regulation includes knowledge and information-sharing among banking and
securities regulators, as well as the creation of clear management standards.
Macro-prudential regulation includes similar activities among international
economic institutions, both public and private.
The BIS has a good track record of encouraging the development of networks
among international economic institutions. In 1992 it assisted in the creation of the
‘Joint Vienna Institute’ alongside the IMF, the European Community, the European
Bank for Reconstruction and Development, the World Bank and the
OECD. This institute sought to provide technical assistance to Central and
Eastern European countries and the newly independent former Soviet republics
following the collapse of the Soviet system. It also provided an opportunity for
the BIS to establish data-sharing relationships with the major international economic
institutions. Following the Asian and Russian ﬁnancial crises of 1997–8
(which it successfully predicted),29
the BIS hosted a Financial Stability Forum
(FSF) to bring together central bank ofﬁcials, national ﬁnancial regulators and
representatives from the IMF, among others. Importantly, the FSF dramatically
expanded the number of countries involved in discussions, with potentially
greater voice for the Group of Twenty (G20),30
and also increased the range of
topics on the table, including, for example, the regulation of hedge funds and
offshore ﬁnancial centres.31
In 1999 the BIS also set up the Financial Stability
Institute to promote common standards in ﬁnancial regulation and to act as a
‘one stop shop’ for regulators to learn about new market instruments and techniques.
In addition, since 1999, the BIS, IMF, World Bank and OECD have published
creditor-based measures of developing and transition countries’ external
debt.32
All of these activities are designed to thicken the information networks
among international economic institutions with the desire of creating a global standard
of market civilisation.
One interesting aspect of the BIS is its efforts to support regionalisation.
While many other international economic institutions are criticised for policy
homogeneity that cannot account for regional differences (criticisms that are
waged particularly against the IMF), the BIS has actively sought to create regional
ofﬁces and build relationships with central banks and regional associations that are
inclusive rather than exclusive. This also occurs at a time when new shareholding
member central banks are from Central Europe, East Asia and the Western Hemi-
sphere.33
During the past 15 years, the BIS has maintained a consistent presence at
regional associations in an advisory role.34
From these earlier connections, the BIS
opened up an Asian regional representative ofﬁce in Hong Kong and an American
representative ofﬁce in Mexico City. Furthermore, in July 2003, the BIS took over
the management of the US$1 billion Asian Bond Fund (ABF) created by the
Executives’ Meeting of East Asia–Paciﬁc Central Banks (EMEAP).35
In addition to encouraging macro-prudential regulations through regional and
international forums and involving CRAs in monitoring, the BIS places great
emphasis on the capacity to inﬂuence central bankers’ ideas and interests
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through the forging of close personal networks. As such, the BIS actively cultivates
what Timothy J. Sinclair has recently termed ‘embedded knowledge net-
works’.36
The BIS has explicitly sought to foster a ‘culture of risk management’
among central bankers that can reduce procyclical ‘overlending’.37
The BIS
also stresses the importance of training central bank ofﬁcials, and others, to read
and interpret ﬁnancial data. From the BIS’s viewpoint, frequent meetings and
the establishment of common frames for understanding are more likely to
produce ‘symmetrical regulatory policy’ that fosters not only better ﬁnancial
and monetary regulation but also stronger commitments to publicly defending
inﬂation and deﬁcit targets. The question here, of course, is whether those attending
these meetings are responsible to the BIS as shareholders in the institution, or
to their own governments and people.38
Last words
The BIS has a special place within the global political economy as the key ﬁnancial
regulator but also as an institution that is a limited liability company with no
formal capacity to enforce the standards it generates.39
Instead, the BIS relies on
its capacity to gather and share information, to convince central banks of their best
interests at a collective and individual level and, after all, to represent its shareholders.
Given these attributes, it is perhaps surprising that the bulk of work on
this international quango has stressed how it is conveniently used by Great
Powers in their self-interested desire to overcome collective action problems.40
As the institution has no formal enforcement powers to ‘lock in’ member
central banks, one of its key tasks is to shape and transform central bankers’
and prudential regulators’ ideas and therefore interests.41
So far the BIS appears
to have succeeded in doing so. While strategic action and ﬁnancial innovations
provide central and commercial banks some room to move, it is difﬁcult to defy
a web of rules, norms and decision-making procedures that has become so
deeply ingrained.42
Basle II provides a good example here of how an IT staff’s
maintenance of networks and structures places great pressure on the executive
staff to follow suit rather than buck the system. In early 2003 US regulators
were wavering in their willingness to agree to Basle II and even following the
agreement, in September 2005, the Federal Reserve announced that US ﬁnancial
regulators would delay implementation of the accords until 2008.43
Nonetheless,
the USA intends to implement the accord.
Finally, while shared ideas and interests among friends may be all well and
good, there is a growing legitimacy gap between the prudential ﬁnancial regulation
being devised by the BIS and BCBS, and what can actually be implemented.
Basle II is likely to place a hefty premium on most developing countries’ ﬁnancial
activities and will not necessarily increase ﬁnancial stability. This problem is particularly
troublesome given the amount of capital required for providing the technical
infrastructure to meet Basle II standards.44
As a consequence, developing
countries face both internal and external constraints on the amount of capital
they can access. The drive among international economic institutions, both
public and private, to improve their arm’s-length capacity to assess the creditworthiness
of developing countries is one key feature of this current period of
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ﬁnancial globalisation.45
While this aim is undoubtedly superior to the ‘gunboat
diplomacy’ of the last period of ﬁnancial globalisation, it does not obscure critically
important questions concerning the legitimacy of our global ﬁnancial
order.46
Notes
My thanks to Andre´ Broome, John M. Hobson, Shogo Suzuki and Gudrid Weihe for their comments and
suggestions.
1. Bank for International Settlements (BIS), 75th Annual Report (BIS, 2005), pp. 80, 116. Foreign exchange
turnover has increased 36 per cent since 2001. The investor protection ﬁgure is for ‘credit default swaps’,
which is an agreement between two parties to mitigate credit risks on investments. This market has increased
sixfold since 2001. It works like this: David lent Linda some money and he worries about her capacity to
repay. Anna, the cunning devil, then offers to cover any losses David may incur if he agrees to give her 2
per cent of the value of the loan every three months for ﬁve years.
2. Article 3 of BIS Statutes (1930).
3. Gianni Toniolo with Piet Clement, Central Bank Cooperation at the Bank for International Settlements,
1930–1973 (Cambridge University Press, 2005), pp. 50–1.
4. While this term normally refers to local government operations, it also works internationally.
5. Currently the Board has 17 members, of which six sit permanently (the same founders, minus Japan) and the
remaining members comprise their ‘seconders’ and three countries (Canada, Japan and the Netherlands)
currently elected to Board. Nout Wellink, the President of the Netherlands, is currently the Chairman and
Malcolm D. Knight is currently the General Manager.
6. The BIS changed to the SDR in April 2003.
7. Calculated from BIS annual reports for 1993 to 2005. The upper end of this ﬁgure, some 30.7 per cent, was
that proposed for 2005, a nearly 12 per cent increase on 2004. The low point, 13.7 per cent, was registered in
1999 following the Asian and Russian ﬁnancial crises. In terms of proﬁts returned as a proportion of total
assets, the BIS is not as competitive as US banks but out-performed both German and Japanese banks in
2004. BIS, 75th Annual Report, pp. 121, 188, 192.
8. Ibid., pp. 155–7.
9. The BIS directly collects economic data from 34 of its member central banks and reports on the domestic
issuance of securities in 47 countries. Its international ﬁnancial statistics cover 95 per cent of all banking
transactions, a service the BIS has provided since 1983. See Toniolo, Central Bank Cooperation, p. 685.
10. Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, Switzerland, the UK and the
USA.
11. See Beth A. Simmons, ‘Why Innovate? Founding the Bank for International Settlements’, World Politics,
Vol. 45, No. 3 (1993), pp. 361–401.
12. BIS, 46th Annual Report (BIS, 1976), p. 76.
13. See Leonard Seabrooke, US Power in International Finance (Palgrave, 2001), pp. 95–8, 119–20.
14. Kenneth Rogoff, ‘International Institutions for Reducing Global Financial Instability’, Journal of Economic
Perspectives, Vol. 13, No. 4. (1999), p. 32.
15. See, for general detail, Duncan Wood, Governing Global Banking: The Basel Committee and the Politics of
Financial Globalisation (Ashgate, 2005).
16. Bank of England, ‘Major International Banks’ Performance: 1980–91’, Bank of England Quarterly Bulletin,
August (1992), p. 290.
17. BIS, 70th Annual Report (BIS, 2000), p. 158.
18. Seabrooke, US Power, pp. 177–9. Most developing countries, however, were only able to implement a ﬁfth
of the proposed measures. See Giovanni Majnoni, Margaret Miller & Andrew Powell, Bank Capital and
Loan Loss Reserves under Basel II: Implications for Emerging Countries, World Bank Policy Research
Working Paper 3437, October 2004, p. 16.
19. BIS, Recent Innovations in International Banking (BIS, 1986). One simple way to consider this process is
that rather than maintaining long-term traditional loans, banks increasingly turned to exchanging ‘IOUs’
that could be bought and sold either short term or long term. For more, see Leonard Seabrooke, ‘Disintermediation’,
in Martin Grifﬁths (ed.), Routledge Encyclopedia of International Relations and Global Politics
(Routledge, 2005), pp. 193–6.
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20. Andre Lucas, ‘Evaluating the Basle Guidelines for Backtesting Banks’ Internal Risk Management Models’,
Journal of Money, Credit and Banking, Vol. 33, No. 3 (2001), pp. 826–46.
21. BIS, 67th Annual Report (BIS, 1997), p. 138.
22. BIS, 69th Annual Report (BIS, 1999), p. 153.
23. ‘Basel II: Blip on the radar screen or major event?’, Bank News, 1 April 2003.
24. On rating methodologies, see Layna Mosley, Global Capital and National Governments (Cambridge
University Press, 2003), pp. 139–45.
25. BIS, 75th Annual Report, p. 166.
26. On the importance of small banks to the US economy, and how the Bush administration is actively undermining
them, see Leonard Seabrooke, The Social Sources of Financial Power: Domestic Legitimacy and
International Financial Orders (Cornell University Press, forthcoming 2006).
27. Stijn Claessens, Geoffrey R. D. Underhill & Xiaoke Zhang, ‘Basle II Capital Requirements and Developing
Countries: A Political Economy Perspective’, paper presented to the Annual Convention of the International
Studies Association, Montre´al, Canada, 17–21 March 2004.
28. BIS, 67th Annual Report, pp. 148–9.
29. See Jacqueline Best, The Limits of Transparency: Ambiguity and the History of International Finance
(Cornell University Press, 2005), p. 138.
30. Randall D. Germain ‘Global Financial Governance and the Problem of Inclusion’, Global Governance, Vol.
7, No. 4 (2001), pp. 411–26. The G20 includes the ﬁnance ministers and central bank governors of:
Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South
Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the UK and the USA. It also includes
representatives from the EU, the IMF and the World Bank.
31. See Jason Sharman’s brilliant analysis of how international forums use ‘shaming’ techniques to pressure offshore
ﬁnancial centres, in Jason C. Sharman, Tax Havens and the Struggle for Global Tax Regulation
(Cornell University Press, forthcoming 2006).
32. The most recent publication of these statistics, in August 2005, included data on 176 countries.
33. Seven Central European, eight East Asian and four Western Hemisphere central banks became shareholding
members between 1993 and 2003. Toniolo, Central Bank Cooperation, pp. 667–96.
34. For example, in 2004 BIS representatives attended ﬁve regional central bank associations in Africa.
35. ‘BIS launches Asian Bond Fund’, The Asian Banker, 15 June 2003.
36. Timothy J. Sinclair, The New Masters of Capital: American Bond Ratings Agencies and the Politics of
Creditworthiness (Cornell University Press, 2005), pp. 15–16.
37. BIS, 72nd Annual Report (BIS, 2002), p. 152.
38. BIS, 75th Annual Report, p. 147.
39. Other institutions, however, do enforce BIS standards. For example, the IMF included Basle I compliance in
loan conditions that followed the Asian and Russian ﬁnancial crises.
40. Simmons, ‘Why Innovate?’; Thomas Oatley & Robert Nabors, ‘Market Failure, Wealth Transfers and the
Basle Accord’, International Organization, Vol. 52, No. 1 (1998), pp. 35–54.
41. Tony Porter, ‘Politics, Institutions, Constructivism and the Emerging International Regime for Financial
Regulation’, Review of Policy Research, Vol. 19, No. 1 (2002), pp. 53–79.
42. On ﬁnancial actors’ agency within institutional constraints see Leonard Seabrooke, ‘Civilizing Global
Capital Markets: Room to Groove?’, in Brett Bowden & Leonard Seabrooke (eds), Global Standards of
Market Civilization (Routledge/RIPE Series in Global Political Economy, forthcoming 2006).
43. ‘Banking Agencies Announce Revised Plan for Implementation of Basel II Framework’, Federal Reserve
Board Joint Press Release, 30 September 2005, http://www.federalreserve.gov/boarddocs/press/bcreg/
2005/20050930/default.htm
44. Recent estimates suggest Asian banks will spend up to 11 per cent of their annual budgets on building information
technology systems for Basel II compliance until 2012, an investment considered to be ‘a large investment
with little bottom line returns’. See ‘Compliance architecture for ﬁnancial institutions’, New Straits
Times, 12 September 2005.
45. On ‘developed country “government-at-a-distance” over developing countries’, see Sinclair, The New
Masters of Capital, p. 147.
46. See Seabrooke, The Social Sources of Financial Power, ch. 7.
The Bank for International Settlements
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