From the 1970s onwards, the BIS has become host to the main global standard setters for the financial system. The BIS member central banks and supervisory authorities, working through the Basel-based committees, have been the driving force behind this. The growing global outreach of the BIS over the last quarter century has been hugely beneficial to this process. However, the ultimate political responsibility for setting financial standards and regulations remains where it belongs: with domestic policymakers.
A 1950s view of the Savoy Hôtel de l'Univers in Basel, where the BIS was headquartered from 1930 to 1977.
Early information sharing on standards and regulations.
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- In many countries, banking supervision and regulations were first introduced or strengthened after the Great Depression of the 1930s. These efforts happened at the domestic level, and there was very little international cooperation. The BIS played a small role in facilitating the exchange of information on domestic regulations among its member central banks, for instance through the publication of a compendium of national financial market regulations in force.
The failure of West Germany's Bankhaus Herstatt in 1974 raised concerns regarding cross-border banking crises. (photo © - Keystone)
From monitoring financial stability risks to the Basel I Capital Accord.
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- In 1971, the G10 Governors create the Euro-currency Standing Committee to consider policy problems arising out of the existence and operations of the eurocurrency market. The possibility of regulating the market is considered, but ultimately rejected.
- In 1974, the high-profile failures of Bankhaus Herstatt and Franklin National Bank raise the spectre of growing financial stability risks in the post-Bretton Woods world. In December 1974, the G10 Governors create the Committee on Banking Regulations and Supervisory Practices, which in 1990 becomes the Basel Committee on Banking Supervision.
- In September 1975, the BCBS issues the Basel Concordat, which sets out principles for sharing supervisory responsibility for banks' foreign branches, subsidiaries and joint ventures between host and parent (or home) supervisory authorities. In May 1983, the Basel Concordat is revised and reissued as the Principles for the supervision of banks' foreign establishments.
- In July 1988, the G10 Governors approve the Basel Capital Accord (Basel I) on the international convergence of capital measurement and capital standards. They agree to apply these standards to their own banking industry by the end of 1992 at the latest.
Photo caption:
Stock exchanges across Asia were badly hit in the 1997-98 crisis. The Asia crisis prompted the establishment of the G20 and the Financial Stability Forum to better coordinate international efforts to strengthen financial stability. (photo © - Keystone)
International standards for payment systems and banking supervision.
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- In November 1990, the G10 Governors create the Committee on Payment and Settlements Systems to study policy and oversight issues related to cross-border and multicurrency interbank netting schemes. It is renamed as the Committee on Payments and Market Infrastructures in 2014 as its mandate evolves.
- In July 1992, the Basel Committee reformulates the principles for the supervision of international banking groups and their cross-border establishments as a set of minimum standards, which the G10 supervisory authorities expect each other to observe.
- In January 1996, the Joint Forum is established under the aegis of the Basel Committee, the International Organization of Securities Commissions and the International Association of Insurance Supervisors, bringing together senior bank, insurance and securities supervisors representing their supervisory constituencies.
- In September 1997, after a broad consultation with non-G10 supervisors, the Basel Committee issues its Core Principles for effective banking supervision.
- In June 2004, the central bank Governors and Heads of Supervision endorse the release of the International convergence of capital measurement and capital standards: a revised framework, better known as Basel II.
Press conference by the Basel Committee on Banking Supervision in 2017 presenting the Basel III reform package. On the right: Stefan Ingves (Governor Sveriges Riksbank and Chair BCBS), Mario Draghi (President ECB) and William Coen (Secretary General BCBS).
Post-crisis reforms and global governance.
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- In April 2009, the G20 sets up the Financial Stability Board (FSB) with a new macroprudential supervision mandate. The FSB is set up as a separate legal entity, with its secretariat based at the BIS in Basel.
- In the wake of the Great Financial Crisis (2007-09), the Basel Committee significantly increases its membership to 45 members from 28 jurisdictions, both from central banks and supervisory authorities. Likewise, the CPMI significantly increases its membership to comprise senior officials of 28 BIS member central banks.
- In November 2010, the G20 endorses the FSB policy framework for reducing the moral hazard posed by systemically important financial institutions.
- In June 2011, the Basel Committee releases Basel III: a global regulatory framework for more resilient banks and banking systems, introducing revised capital rules.
- In April 2012, the CPSS and IOSCO jointly release Principles for Financial Market Infrastructures, containing new international standards for payment, clearing and settlements systems.
- In 2017, the Basel Committee's oversight body, the Group of Central Bank Governors and Heads of Supervision, endorses the outstanding Basel III post-crisis regulatory reforms.
- In 2020, in view of the Covid-19 pandemic, the Basel Committee's oversight body, the GHOS, announces that the implementation date of the Basel III standards will be deferred by one year to 1 January 2023 to allow banks and supervisors to commit their full resources to the Covid-19 response.
