Why was the BIS set up?

Board of Directors' unofficial first meeting in Basel, April 1930
Board of Directors' unofficial first meeting in Basel, April 1930

The Bank for International Settlements was established in 1930 to administer ("settle") the reparation payments imposed on Germany under the Treaty of Versailles following the First World War. It was also envisaged that the BIS would provide central banks with an institutional forum for cooperation. The Bank's name is derived from this original role. Amid the financial and economic crisis of the early 1930s, the matter of reparations soon faded, allowing the BIS to focus its activities entirely on cooperation among central banks.


Why Basel?

The choice of Switzerland for the seat of the BIS was a compromise by those countries that established the BIS: Belgium, France, Germany, Italy, Japan, the United Kingdom and the United States. When consensus could not be reached on locating the Bank in London, Brussels or Amsterdam, the choice fell on Switzerland. An independent, neutral country, Switzerland offered the BIS less exposure to undue influence from any of the major powers.

Within Switzerland, Basel was chosen largely because of its location, with excellent railway connections in all directions, especially important at a time when most international travel was by train.

 Overview The 1930s and 1940s 
For more on the BIS's history, read Gianni Toniolo (with Piet Clement), Central Bank Cooperation at the Bank for International Settlements, 1930-1973, Cambridge University Press, Cambridge-New York, 2005.