This chapter summarises the role of the BIS in international cooperation directed towards greater monetary and financial stability. It describes the institutional framework in which this cooperation is pursued, as well as the various related activities that marked the past year. In addition to its regular activities, the Bank will also be staging its first ever public exhibition, publishing a book on the history of central bank cooperation and hosting an academic conference as part of the festivities organised to celebrate its 75th anniversary in 2005.
The bimonthly meetings of Governors of BIS member central banks remained a key mechanism through which the Bank contributed to international cooperation in 2004/05. In this context, the Global Economy Meeting monitors economic and financial developments and assesses the vulnerabilities in the world economy and financial markets. The meetings of the G10 Governors and those of Governors of key emerging market economies - the latter initiated in March 2005 - explore conjunctural themes of special relevance to the respective groups. In addition, various meetings were organised during the year on issues of central bank interest, in several cases with the participation of a broad range of senior non-central bank and private financial sector officials. In providing the necessary analytical support to these meetings, the topical and country coverage of the economic, monetary and financial statistics compiled by the Bank was also expanded. A new international initiative was the launch of the International Journal of Central Banking (IJCB), sponsored widely within the central banking community and by the BIS.
The Bank continued to host and support the secretariats of the Basel Committee on Banking Supervision (BCBS), the Markets Committee, the Committee on the Global Financial System and the Committee on Payment and Settlement Systems. The Bank also remains active in assisting the work of a number of independent organisations that have their secretariat at the BIS, namely the Financial Stability Forum, the International Association of Insurance Supervisors and the International Association of Deposit Insurers.
With the release of the revised capital adequacy framework ("Basel II") last year, a significant part of the activities of both the BCBS and the Bank's Financial Stability Institute will be devoted to supporting regulatory and supervisory authorities in their preparations for Basel II implementation.
With safety and liquidity as the key features of its credit intermediation services, the Bank continued to serve as a prime counterparty to central banks in their financial operations. In addition, it performed agent and trustee functions for a variety of financial transactions. Following the creation in 2003 of the first Asian Bond Fund (ABF1), in December 2004 EMEAP member central banks and monetary authorities launched the second stage (ABF2), for which the BIS acts as administrator.
In the course of the past financial year, the balance sheet grew significantly to stand at SDR 180.5 billion, representing a year-on-year increase of 7.5%. Largely as a result of lower average interest rates, which depressed income from securities financed with the Bank's equity, net profits declined by 25% compared with the previous financial year.