Some Remarks on the Bank for International Settlements (BIS) Then and Now
5 April 2013
(EIRNS)—Given the central role of the Financial Stability Board (FSB) and with it the Bank for International Settlements (BIS) in establishing the present "bail-in" robbery policy as global policy, it is worthwhile to consider the parallels of today’s situation with that of 1930, when the BIS was officially founded.
Its raison d’être was to create a new institution to which the failing German reparation payments would be centrally paid, as part of the debt-restructuring "Young Plan," which would then apportion these money flows to the various national reparation creditors. This worked until 1931, when the direct German war reparations payment regime came to a stop for the time being, due to the world economic crisis.
The BIS had taken on a central function in the efforts to keep the international financial system of that time afloat — which was to a large extent a system of war debts and speculation on top of that, which had to be repaid by the wartime Allied nations to the Anglo-U.S. network of Morgan and the Bank of England. The imposition of that reparations policy had led to the Weimar hyperinflation in 1923, with Montagu Norman’s friend Hjalmar Schacht put in as the "Old Wizard," who then imposed brutal austerity and deflation after the "Rentenmark" currency reform; the same Schacht who played the key role in bringing the Nazi regime to power. With the same act, the German Reichsbank was no longer allowed to create domestic credit.
The BIS between 1933 and 1945 was extremely close to the Nazi policy; after 1938 it collected the Austrian gold and helped to get ahold of the British-based gold reserves of the Czech nation after the Nazi occupation; Montagu Norman, as one of the presidents of the BIS at the time, was instrumental in that transaction. In the 1939-1945 war, the BIS handled all currency transactions for the Nazi Reich. When Roosevelt wanted to eliminate the BIS after World War II because of its closeness to the Nazis and the Anglo-U.S. networks protecting them, his effort was stymied by the British, with Keynes most notably arguing against it.
Then the BIS continued to play a key role in coordinating "international currency and financial stability;" played the key role in preparing the European Monetary Union; and is now instrumental in coordinating the policies of central banks, to save today’s financial system. The Secretariat of the Financial Stability Board (FSB) and the so-called Basel Committee for Banking Supervision are placed at the BIS. It also serves as the collecting point for world currency reserves and as an investment bank for the world’s central banks.
There is certainly more to be said, but the main point is to remember the historical parallel of the various steps of a bankrupt financial system, which was the result of the British-led geopolitical World War I, which then was "reorganized" with various steps and defended at literally "all costs" to the bloody end. Glass-Steagall and sovereign credit policy for development was the answer by Roosevelt at that time, and it is the same answer today, to keep the world from going under in an orgy of cannibalism and war. [EFI]