What is Bank for International Settlements (BIS)?
The Bank for International Settlements (BIS) is an international financial institution based in Basel, Switzerland, that serves as the "central bank of central banks." It facilitates cooperation between national central banks, provides them with banking services, and conducts research on global financial stability. Founded in 1930, it is the world's oldest international financial institution.
Definition
The BIS has 63 member central banks (representing ~95% of global GDP) and operates from its Basel headquarters plus offices in Hong Kong and Mexico City. Core functions: (1) hosting central bank governors meetings every two months at the Basel Tower for global monetary-policy coordination; (2) providing banking services to central banks (custody, FX, gold transactions, asset management — BIS holds approximately $1 trillion in central-bank assets); (3) publishing influential research including the Triennial Survey of FX markets and quarterly reviews of global financial conditions; (4) housing the Basel Committee on Banking Supervision (sets global banking regulations including Basel I, II, III, IV capital requirements); (5) housing the Committee on Payments and Market Infrastructures (CPMI). The BIS Triennial Survey (every 3 years, most recent 2022) is the definitive measure of global FX market size — currently $7.5 trillion daily turnover.
Worked example
The BIS Triennial Central Bank Survey of FX and OTC Derivatives Markets (April 2022 reference period, published October 2022) found: daily global FX turnover of $7.5 trillion, up 14% from 2019. Top currencies by share: USD 88.5%, EUR 30.5%, JPY 16.7%, GBP 12.9%, CNY 7.0%, AUD 6.4%, CAD 6.2%, CHF 5.2% (percentages sum to 200% because each transaction involves two currencies). Most-traded pairs: EUR/USD 22.7%, USD/JPY 13.5%, GBP/USD 9.5%, USD/CNY 6.6%, USD/CAD 5.5%, AUD/USD 5.1%. The BIS data is the gold standard for understanding global FX market structure. The next Triennial Survey will be conducted in April 2025 with results published in October 2025.
Why it matters
For currency markets, the BIS provides the most reliable global data on FX market structure, central-bank reserves composition, and cross-border banking flows. For policymakers, the BIS facilitates the informal coordination that prevents currency wars from escalating — the Plaza Accord (1985) and Louvre Accord (1987), while not formally BIS-arranged, used BIS-facilitated central-banker relationships. For travelers and businesses, BIS data on FX-market liquidity helps predict spread dynamics — major pairs covered by deep BIS-measured liquidity offer better retail rates than thinly-traded exotics. The BIS-set Basel III capital rules also affect bank willingness to provide FX services.
Frequently asked questions
Who owns the Bank for International Settlements?
The BIS is technically owned by 63 member central banks (one share each), giving it an unusual ownership structure that limits any single country's control. Member central banks include all major economies plus most G20 and many smaller central banks. The BIS operates as a Swiss-domiciled bank under a 1930 international convention, with diplomatic immunity for its operations. The Board of Directors includes governors of major central banks (US Fed, ECB, BoJ, BoE, PBoC, BoC, RBA), rotating chairmanship every three years.
What's the Basel Committee on Banking Supervision?
The Basel Committee (housed at BIS but technically independent) sets global banking regulations — particularly the Basel I (1988), Basel II (2004), Basel III (2010-2017), and Basel IV (2017-2025+) capital and liquidity requirements. These rules dictate how much capital banks must hold against their loans and trading positions. Basel rules are voluntary (the Committee can't force adoption) but virtually all major banking jurisdictions implement them — the US Federal Reserve, ECB, BoJ, BoE, PBoC all apply Basel rules in some form. Basel III post-2008 dramatically increased bank capital requirements, contributing to reduced bank willingness to provide certain services (proprietary trading, market-making in less-liquid assets).
Why is the BIS in Basel?
Switzerland was chosen at the 1930 founding because of: (1) Swiss neutrality during European tensions; (2) Switzerland's status as a major international banking center; (3) German-French border location (the original purpose was managing German WWI reparations payments); (4) absence from the League of Nations (avoiding political entanglement). Basel specifically was selected because of its excellent rail connections and proximity to major European capitals. The BIS has remained in Basel for nearly a century — its iconic 16-floor "BIS Tower" is a Basel landmark.
Related terms
Reserve Currency
A reserve currency is held in significant quantities by central banks and other major financial institutions as part of their foreign-exchange reserves. The US Dollar is the dominant global reserve currency, accounting for approximately 58% of allocated reserves; the Euro is second at ~20%.
Foreign Exchange Reserves
Foreign exchange (FX) reserves are foreign currencies and gold held by a central bank to support the domestic currency, defend exchange-rate pegs, intervene in FX markets, and settle international payments. Global FX reserves total approximately $12 trillion as of 2025-2026.
Interbank Rate
The interbank rate is the wholesale exchange rate at which major banks transact currencies among themselves. It is the foundation for all other rates and typically the tightest pricing available — institutional only.