Innovation

• The establishment of the BIS in 1930 is itself a significant innovation. The BIS is the first international financial organisation to be created by an international treaty. To give it the flexibility and necessary protection to perform its tasks as an international cooperation organisation and as an international bank, the BIS is given the status both of an international organisation (with the concomitant privileges and immunities) and of a shareholding company (in which all voting rights are exercised by the member central banks).
• In the late 1930s, at the request of the Universal Postal Union, the BIS develops a scheme for the multilateral settlement of surpluses and deficits arising from international postal traffic between participating countries. The scheme is based on the centralised management of gold sight accounts held on behalf of national postal administrations (through their central banks), thereby greatly reducing the need for physical gold shipments.

Photo caption: Meeting of central bank Governors and experts at the Hôtel Stéphanie in Baden-Baden, Germany, to draft the statutes and charter of the Bank for International Settlements, October-November 1929.

• In 1950, the BIS is appointed agent to the European Payments Union (EPU), and develops an accounting method allowing countries to offset their bilateral trade deficits with certain countries against surpluses with others on a monthly basis, thereby allowing them to manage their scarce foreign exchange reserves more efficiently (multilateral clearing). The EPU achieves free trade and full current account convertibility among its members by 1958 and is subsequently wound up.
• In the 1960s, in order to support the Bretton Woods system of fixed but adjustable exchange rates, central bankers convening at the BIS devise several novel arrangements, some of which become established features of the international monetary system, including the central bank Gold Pool (1961-68), short- and long-term currency support arrangements (eg the Sterling Group Arrangements), multilateral surveillance and a central banks swap network.

Photo caption: Cover page of "The Economist" in 1968. Bank of England Governor O'Brien, returning from a BIS meeting in Basel in which he had secured central bank support for sterling.

• In 1988-89, the Committee of Governors of the central banks of the EU member states and its secretariat, based at the BIS, provide critical support to the work of the Committee for the Study of Economic and Monetary Union (Delors Committee) set up by the European Council. In its meetings in Basel, the Delors Committee develops the criteria that need to be met to achieve European Monetary Union. These criteria will be included in the Treaty on European Union (Maastricht Treaty) adopted in February 1992.
• In 1994, following the move of the newly created European Monetary Institute (the ECB's precursor) from Basel to Frankfurt, the BIS embarks on a globalisation strategy. Over the next quarter century, BIS membership nearly doubles from 33 central banks in the early 1990s to 63 in 2020, and the composition of the Board of Directors is radically overhauled to include the governors of the major emerging market economies.

Photo caption: Opening ceremony of the BIS's Representative Office for Asia and the Pacific in Hong Kong SAR, 1998.
From left to right: Ma Yuzhen (Commissioner of China's Foreign Ministry), Donald Tsang (Financial Secretary of the Hong Kong SAR), Alfons Verplaetse (President and Chairman of the BIS Board of Directors), Dai Xianglong (Governor of the People's Bank of China), Joseph Yam (First Chief Executive of the Hong Kong Monetary Authority), Andrew Crockett (General Manager of the BIS).

• In 1977-79, in view of growing concerns about a sovereign debt build-up in emerging market economies, the Eurocurrency Standing Committee proposes the collection of country risk data directly with major financial institutions, as well as macroprudential measures to curb excessive lending. These proposals are not taken up at this point, but contribute to an emerging macroprudential approach at the BIS and beyond.
• The adoption by the G10 Governors of the Basel Capital Accord (Basel I) in 1988, and their informal commitment to implement it in their own jurisdictions provides an early and powerful example of soft law developed at the BIS. In the following decades, through the work of committees such as the Basel Committee and CPMI and of international bodies such as the FSB, soft law develops into a critical tool for international financial regulation.
• In 2000, in his capacity as chair of the G7 Financial Stability Forum, BIS General Manager Andrew Crockett launches an early call for a macroprudential approach to financial stability issues (and more specifically for countercyclical capital buffers).
• From 2000, innovative research is undertaken at the BIS and elsewhere on macroprudential policies, macro-financial stability frameworks and the financial cycle.

Photo caption: Meeting of the BIS Board of Directors in September 1994. It was the first board meeting in which the Governors of the central banks of Canada, Japan and the United States all participated.

• Many themes of pre-crisis research are further developed at the BIS, in the broader central bank community and by academia immediately after the 2007-09 Great Financial Crisis. This feeds directly into the post-crisis, macroprudential reform efforts coordinated through the newly established G20 Financial Stability Board (which has its secretariat at the BIS).
• In November 2018, the BIS Board of Directors adopts Innovation BIS 2025, the Bank's new medium-term strategy. Its keystones are an increased focus on fintech and innovative ways of working.
• In 2018, the BIS joins the Network for Greening the Financial System (www.ngfs.net), set up by a group of central banks and supervisors to contribute to the development of environmental and climate risk management in the financial sector and to mobilise mainstream finance to support the transition toward a sustainable economy.
• In 2019, the BIS Innovation Hub is created to identify and develop in-depth insights into critical trends in financial technology of relevance to central banks, to explore the development of public goods to enhance the functioning of the global financial system, and to serve as a focal point for a network of central bank experts on innovation. In cooperation with the local central banks, BIS Innovation Hub centres are opened in Zurich, Hong Kong SAR and Singapore. In June 2020, the Bank announces the opening, over the next two years, of additional Innovation Hub centres in collaboration with the Bank of Canada (Toronto), the Bank of England (London), the European Central Bank/Eurosystem (Frankfurt and Paris) and four Nordic central banks (Danmarks Nationalbank, the Central Bank of Iceland, the Central Bank of Norway and Sveriges Riksbank) in Stockholm. The BIS will also form a strategic partnership with the Federal Reserve System (New York).
• In September 2019, the BIS Banking Department launches an open-ended fund for central bank investments in climate-friendly green bonds to help central banks to incorporate environmental sustainability objectives into the management of their reserves.
• In October 2020, seven central banks and the BIS publish a joint report on Central bank digital currencies: foundational principles and core features.

Photo caption: The Swiss National Bank (SNB) and the BIS sign the Operational Agreement on the BIS Innovation Hub Centre in Switzerland, 31 October 2019.
From left to right: Andréa M. Maechler, Thomas J. Jordan, Agustín Carstens and Hyun Song Shin.