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Bank for International Settlements
BIS was formed with funding by the central banks of six
nations, Belgium, France, Germany, Italy, Japan, and the United Kingdom.
In addition, three private international banks from the United States
also assisted in financing the establishment of the BIS." Each
nation's central bank subscribed to 16,000 shares. The U.S. central
bank, the Federal Reserve, did not join the BIS, but the three U.S.
banks that participated got 16,000 shares each making U.S.
representation three times that of any other nation. The U.S. banks who
joined were J.P. Morgan & Company, First National Bank of New York and
First National Bank of Chicago.
Statutes of the Bank for International Settlements
Objects Of Bank:
"The objects of the Bank are: to
promote the co-operation of central banks and to provide additional
facilities for international operations; and to act as trustees or
agent in regard to international financial settlements entrusted to
it under agreements with the parties concerned."
- Statutes of the Bank for International Settlements Article 3 [as if
January 1930, text as amended on March 10,2003], Basic Texts (Basle,
August 2003), p. 7-8 :
Authorized Capital:
"The authorised capital of the Bank
shall be three thousand million Special Drawing Rights (SDR), as defined
from time to time by the International Monetary Fund.1 (2) It shall be
divided into 600,000 shares of equal nominal value, consisting of three
tranches of 200,000 shares each. (3) The nominal value of each share and
the amount remaining to be paid up shall be stated on the face of the
share certificates which may be issued by the Bank pursuant to Article
16."
- Chapter II: Capital Article 4 (1)
Buyout of Private Shareholder in 2001
On January 8, 2001, an Extraordinary General Meeting of the BIS
approved a proposal that restricted ownership of BIS shares to central
banks. Some 13.7% of all shares were in private hands at that time, and
the repurchase was accomplished with a cash outlay of $724,956,050. The
price of $10,000 per share was over twice the book value of $4,850. Note
Private ownership still possible through countries member banks):
"In accordance with the
resolutions of the Extraordinary General Meeting held on 8 January 2001
and in order to implement Article 15 of the Statutes as amended, the
Bank will, on a compulsory basis, repurchase each share which, as of
that date, is registered in the name of a shareholder other than a
central bank (a "private shareholder"), against payment of compensation
of CHF 16,000 for each share, as follows: .... (4) The Board will
redistribute, in the manner in which it considers appropriate, the
shares repurchased from private shareholders either (a) by offering them
for sale to central bank shareholders against payment of an amount equal
to that of the compensation paid to the private shareholders, or (b) by
offering them for subscription as bonus shares by central bank
shareholders in proportion to the number of shares held (including, if
applicable, any share purchased pursuant to (a) above), it being
understood that this redistribution may be achieved by a combination of
(a) and (b)."
- Article 18(A) (Transitional provisions)
1 One SDR is the equivalent to the sum of US$ 0.577, Euro 0.426,
Japanese yen 21.0 and Pound sterling 0.0984 according to Rule O-1 as
adopted by the Executive Board of the IMF on 29 December 2000 and
effective 1 January 2001; this decision is subject to revision every
five years.
Restriction on Loaning Governments Money or Owning Real
Estate:
The Bank may not: ...
(c) make advances to Governments; ...
(f) except so far as is necessary for the conduct of its own business,
remain the owner of real property for any longer period than is required
in order to realise to proper advantage such real property as may come
into the possession of the Bank in satisfaction of claims due to it.
- Article 24
Apparently the bank also does not accept deposits from, or provide
financial services to, private individuals or corporate entities.
The Banks Operations
Article 21 of the original BIS statutes define day-to-day
operations:
- buying 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 central banks;
- accepting the supervision of gold for the account of central
banks;
- making advances to or borrowing from central banks against gold,
bills of exchange, and other short-term obligations of prime
liquidity or other approved securities;
- discounting, rediscounting, purchasing, or selling with or
without its endorsement bills of exchange, checks, and other
short-term obligations of prime liquidity;
- buying and selling foreign exchange for its own account or for
the account of central banks;
- buying and selling negotiable securities other than shares for
its own account or for the account of central banks;
- discounting for central banks bills taken from their portfolio
and rediscounting with central banks bills taken from its own
portfolio;
- opening and maintaining current or deposit accounts with central
banks;
- accepting deposits from central banks on current or deposit
account;
- accepting deposits in connection with trustee agreements that
may be made between the BIS and governments in connection with
international settlements.;
- accepting such other deposits that, as in the opinion of the
Board of the BIS, come within the scope of the BIS’ functions.13
The BIS also may
- act as agent or correspondent for any central bank
- arrange with any central bank for the latter to act as its agent
or correspondent;
- enter into agreements to act as trustee or agent in connection
with international settlements, provided that such agreements will
not encroach on the obligations of the BIS toward any third parties.
The Bank is Managed by Governors of Central Banks of Belgium,
France, Germany, Great Britain, Italy and U.S.A.
Chapter IV: Management: Article 26: The administration of the
Bank shall be vested in the Board. Article 27: The Board shall be
composed as follows: (1) The Governors for the time being of the central
banks of Belgium, France, Germany, Great Britain, Italy and the United
States of America (hereinafter referred to as ex-officio Directors).
The Bank Gives Itself Immunity
Chapter VII: General Provisions [...] Article 55 (1) The Bank shall
enjoy immunity from jurisdiction, save: (a) to the extent that such
immunity is formally waived in individual cases by the President, the
General Manager of the Bank, or their duly authorised representatives;
or (b) in civil or commercial suits, arising from banking or financial
transactions, initiated by contractual counterparties of the Bank,
except in those cases in which provision for arbitration has been or
shall have been made. (2) Property and assets of the Bank shall,
wherever located and by whomsoever held, be immune from any measure of
execution (including seizure, attachment, freeze or any other measure of
execution, enforcement or sequestration), except if that measure of
execution is sought pursuant to a final judgment rendered against the
Bank by any court of competent jurisdiction pursuant to sub-paragraph
1(a) or (b) above. (3) All deposits entrusted to the Bank, all claims
against the Bank and the shares issued by the Bank shall, without the
express prior agreement of the Bank, wherever located and by whomsoever
held, be immune from any measure of execution (including seizure,
attachment, freeze or any other measure of execution, enforcement or
sequestration).
Article 2 Inviolability:
+The buildings or parts of buildings and surrounding land which,
whoever may be the owner thereof, are used for the purposes of
the Bank shall be inviolable. No agent of the Swiss public
authorities may enter therein without the express consent of the
Bank. Only the President, the General Manager of the Bank, or
their duly authorised representative shall be competent to waive
such inviolability.
+The archives of the Bank and, in general, all documents and any
data media belonging to the Bank or in its possession, shall be
inviolable at all times and in all places.
+The Bank shall exercise supervision of and police power over
its premises.
Article 4 Immunity from jurisdiction and execution
+The Bank shall enjoy immunity from criminal and administrative
jurisdiction, save to the extent that such immunity is formally
waived in individual cases by the President, the General Manager
of the Bank, or their duly authorised representative.
+The assets of the Bank may be subject to measures of compulsory
execution for enforcing monetary claims. On the other hand, all
deposits entrusted to the Bank, all claims against the Bank and
the shares issued by the Bank shall, without the prior agreement
of the Bank, be immune from seizure or other measures of
compulsory execution and sequestration, particularly of
attachment within the meaning of Swiss law.
A quick summary of their immunity, explained further below, includes
- diplomatic immunity for persons and what they carry with them
(i.e., diplomatic pouches)
- no taxation on any transactions, including salaries paid to
employees
- embassy-type immunity for all buildings and/or offices operated
by the BIS
- no oversight or knowledge of operations by any government
authority
- freedom from immigration restrictions
- freedom to encrypt any and all communications of any sort
- freedom from any legal jurisdiction9
Further, members of the BIS board of directors (for instance, Alan
Greenspan) are individually granted special benefits:
- “immunity from arrest or imprisonment and immunity from
seizure of their personal baggage, save in flagrant cases of
criminal offence;”
- “inviolability of all papers and documents;”
- “immunity from jurisdiction, even after their mission has
been accomplished, for acts carried out in the discharge of their
duties, including words spoken and writings;”
- “exemption for themselves, their spouses and children from
any immigration restrictions, from any formalities concerning the
registration of aliens and from any obligations relating to national
service in Switzerland ;”
- “the right to use codes in official communications or to
receive or send documents or correspondence by means of couriers or
diplomatic bags.”10
Lastly, all remaining officials and employees of the BIS have the
following immunities:
- “immunity from jurisdiction for acts accomplished in the
discharge of their duties, including words spoken and writings,
even after such persons have ceased to be Officials of the Bank;”[bold
emphasis added]
- “exemption from all Federal, cantonal and communal taxes on
salaries, fees and allowances paid to them by the Bank…”
- exempt from Swiss national obligations, freedom for spouses
and family members from immigration restrictions, transfer assets
and properties – including internationally – with the same degree of
benefit as Officials of other international organizations.
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