PRESENTED BY: PRIYANKA MANHAS PRIYANKA BATISH PUNEET GOYAL RAVLEEN KAUR

BIS

INTRODUCTION TO BIS
The Bank for International Settlements (BIS) is an intergovernmental organization of central banks. Based in Basel, Switzerland, the BIS was established by the Hague agreements of 1930. It fosters international monetary and financial cooperation and serves as a bank for central banks. It also provides banking services, but only to central banks, or to international organizations like

itself.

The BIS also 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.

FORMATION OF BIS
BIS was formed with funding by the central banks of six nations- Belgium,

France, Germany, Italy, Japan, and the United Kingdom.

Three private international banks from the United States also assisted in

financing the establishment of the BIS.

When established, the BIS was responsible for the collection, administration

and distribution of reparations from Germany, after World War I.

The BIS was also the trustee for Dawes and Young Loans and to promote

central bank cooperation in general.

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After World War II, the BIS turned its focus to the defense and implementation of

the World Bank's Bretton Woods System The BIS has also emerged as an emergency "funder" to nations in trouble, during Mexico and Brazil debt crises in 1982 and 1998.
The BIS has also functioned as trustee and agent from 1979 to 1994 for the

European Monetary System.

The BIS has always been a promoter of central bank cooperation in an effort to

ensure

global

monetary

and

financial

stability.

Departments of BIS
Monetary and Economic Department: Undertakes

research and analysis and organises key meetings to shape understanding of policy issues concerning central banks. Banking: Provides a wide range of financial services that help central banks pursue their goal of financial stability. General Secretariat: Provides a comprehensive range of corporate services to the BIS, from facilities management to finance, communications and IT. Other units: Legal Service, Risk Control, Internal Audit, Compliance and Operational Risk.

OBJECTIVES
Regulates capital adequacy: The BIS's main role is in setting capital

adequacy requirements.

Encourages reserve transparency: Reserve policy is also important,

especially to consumers and the domestic economy.

The Bank is Managed by Governors of

Central Banks of Belgium, France, Germany, Great Britain, Italy and U.S.A

Role of BIS in Euro periphery Crisis (Greece, Portugal and Spain)

BIS urged tighter monetary policy High interest rate Proper policy making The BIS also coordinated short-term

lending to countries in financial crisis

Financial statement of BIS

The BIS publishes audited annual financial statements

as at 31 March each year in its Annual Report, which provides a comprehensive overview and analysis of the Bank's balance sheet and profit and loss account, together with other financial, capital adequacy and risk management disclosures in line with international accounting frameworks It also publishes unaudited semi-annual financial statements as at 30 September each year The BIS balance sheet amounted to SDR 249.6 billion at 30September 2011, a decrease of SDR 11.5 billion since its financial year end in March 2011.

Liabilities of BIS
The size of the BIS balance sheet is in normal circumstances

driven by placements from customers. On 30September 2011, customer placements (excluding repurchase agreements) amounted to SDR 210.6 billion, compared with SDR 228.3 billion at the previous financial year end in March 2011. Around 90% of customer placements are denominated in currencies, with the remainder in gold. Currency deposits decreased from SDR 207.1 billion at 31 March 2011 to SDR 189.4 billion at end-March 2011

Assets of BIS
The assets held by the BIS consist of

government and quasi-government securities, reverse repurchase agreements and investments with highly rated commercial banks of international standing. The Bank owned 116 tonnes of fine gold at 30September 2011. The Bank manages its credit exposure in a prudent manner, with more than 99% of the Bank's credit exposure rated A- or higher as at 30September 2011.

Bank 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 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

Services of BIS
To provide security, the Bank has built up a sizeable

equity capital and ample reserves. It pursues an investment strategy focused on combining diversification benefits with intensive credit and market risk analysis. To ensure liquidity, the Bank stands ready to repurchase its tradable instruments at little cost to its customers and thus respond quickly and flexibly to their needs. The BIS offers an attractive and competitive return on the funds deposited by central banks and international organisations.

Other services
Asset management services :Fixed income portfolios
are: invested in government bonds or high-grade credit securities structured as dedicated portfolio mandates or BIS Investment Pool (openend funds) offered as either single currency or multi-currency mandates in the major world reserve currencies

Foreign exchange and gold services :Services

offered are: spot deals, swaps, outright forwards, options, FX-linked deposits foreign exchange overnight orders safekeeping and settlements facilities available loco London, Berne or New York purchases and sales of gold: spot, outright, swap or options

Various Instruments of BIS

BIS money market instruments:
*Sight/notice accounts and fixed and floating-rate

deposits in most convertible currencies Fixed-term deposits can also be denominated in and index-linked to a basket of currencies such as the SDR Standard and non-standard amounts and maturities

BIS tradable instruments :

Issued in major currencies Available in two forms: Fixed Rate

Investments at the BIS (FIXBIS) for any maturities between 1 week and 1 year and Medium-Term Instruments (MTIs) for quarterly maturities from 1 year and up to 10 years MTIs available also with an embedded call feature (Callable MTIs)

NEED OF BIS
Contributing to international cooperation: BIS produces research and

statistics, and organizes seminars and workshops focused on international financial issues.

Offering services to committees established and working at the BIS : BIS

also functions as an international "think tank" for financial issues through various committees.

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It provides gold and foreign exchange transactions for them

and holds central bank reserves.

The BIS is also a banker and fund manager for other

international financial institutions.

Banking services offered by BIS To Banking Industry

The BIS offers a wide range of financial services. BIS financial services are provided out of two

linked trading rooms: one at its Basel head office and one at its office in Hong Kong SAR. The Bank continually adapts its product range in order to respond more effectively to the evolving needs of central banks. The Bank has developed a range of more sophisticated financial products which central banks can actively trade with the BIS to increase the return on their foreign assets.

The Bank also transacts foreign exchange and

gold on behalf of its customers. The BIS offers a range of asset management services in sovereign securities or high-grade assets. There is a specific portfolio mandate negotiated between the BIS and a central bank or an open-end fund structure - the BIS Investment Pool (BISIP) - allowing customers to invest in a common pool of assets. The BIS extends short-term credits to central banks, usually on a collateralised basis.

CURRENT STATUS OF BIS

Outcome of the September 2011 Basel Committee meeting. Assessment of the macroeconomic impact - report issued by the Basel

Committee and the Financial Stability Board.

Basel Committee announces Mr Wayne Byres as its next Secretary General. The Basel Committee issues final rules for global systemically important

banks.

Banks' internal audit function - consultative paper issued by the Basel

Committee

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Application of own credit risk adjustments to derivatives- basel committee

consultative document.
Consultative paper on revised "Core principles for effective banking

supervision" issued by the Basel Committee.

Consultative paper on "Principles for the supervision of financial

conglomerates" released by the Joint Forum.

Proposed regulatory capital disclosure requirements issued by the Basel

Committee.

Restrictions on BIS
The Bank may not: ...

* Make advances to Governments; ...

The bank also does not accept deposits

from, or provide financial services to, private individuals or corporate entities.

Basel Committee on Banking Supervision

The Basel Committee on Banking Supervision provides a forum

for regular cooperation on banking supervisory matters Its objective is to enhance understanding of key supervisory issues and improve the quality of banking supervision worldwide It seeks to do so by exchanging information on national supervisory issues, approaches and techniques, with a view to promoting common understanding. The Committee's work is organised under four main subcommittees: The Standards Implementation Group The Policy Development Group The Accounting Task Force The Basel Consultative Group

Committee on the Global Financial System

The CGFS, formerly known as the Euro-

currency Standing Committee, was established in 1971 with a mandate to monitor international banking markets Its initial focus was on the monetary policy implications of the rapid growth of off-shore deposit and lending markets, but attention increasingly shifted to financial stability questions and to broader issues related to structural change in the financial system

Committee on Payment and Settlement Systems

The Committee on Payment and Settlement

Systems (CPSS) contributes to strengthening the financial market infrastructure through promoting sound and efficient payment and settlement systems. The CPSS is a standard stetting body for payment and securities settlement systems.

CONCLUSION
The BIS is a global center for financial and economic interests. As

such, it has been a principal architect in the development of the global financial market. Given the dynamic nature of social, political and economic situations around the world, the BIS can be seen as a stabilizing force, encouraging financial stability and international prosperity in the face of global changes.