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Promoting Global Monetary and Financial Stability: The Bank for International Settlements after Bretton Woods, 1973–2020

Editor(s):Borio, Claudio
Claessens, Stijn
Clement, Piet
McCauley, Robert N.
Shin, Hyun Song
Reviewer(s):Rockoff, Hugh

Published by EH.Net (March 2022).

Claudio Borio, Stijn Claessens, Piet Clement, Robert N. McCauley, and Hyun Song Shin, eds. Promoting Global Monetary and Financial Stability: The Bank for International Settlements after Bretton Woods, 1973–2020. Cambridge: Cambridge University Press, 2020. xviii + 268 pp. $110 (hardback), ISBN 9781108495981.

Reviewed for EH.Net by Hugh Rockoff, Department of Economics, Rutgers University.


This collection of six essays was created to celebrate the 90th birthday of the Bank for International Settlements (BIS). It covers the years 1973–2020. Toniolo and Clement (2005) covered 1930–1973 in a detailed and well-received volume.

The BIS was established in 1930. Its first home was in the former Savoy Hôtel Univers in Basel, Switzerland. It was part of the Young Plan to facilitate the payment of Germany’s World War I reparations. However, its raison d’être soon disappeared with the moratoria on German reparations. During the 1930s, moreover, the reputation of the BIS was tarnished when it accepted deposits of gold looted by the Nazis. At the Bretton Woods Conference, there were calls, including one from the top American negotiator Harry Dexter White, to liquidate the BIS. After all, two new international agencies, the International Monetary Fund and the World Bank, would govern the international financial system. This recommendation, however, failed to garner sufficient support.

Although the BIS provides some banking services for central banks, its main functions, to judge from these essays, are twofold: to provide a forum where central bankers can discuss common problems and form relationships and to provide research and analysis. It is difficult to place objective values on these services. The essays abound with phrases like “forum for information exchange and discussions,” “forum for central bank cooperation,” “ideal venue for cooperation” and so on, but how much this meant is difficult to say. The same is true of its role as supplier of information and ideas. The BIS has an active research department, but measuring its impact is difficult.

This book is a birthday present from and for the BIS. There are no naysayers here. Nevertheless, the six essays in this well-planned volume – the first five by distinguished academic students of central banking and international finance and the final essay by a distinguished practitioner – are to my mind, cautious and persuasive.

The first chapter, by Harold James, “The BIS and the European Monetary Experiment,” delivers what the title suggests: a clear and informative description of the road to the Euro emphasizing the role of the BIS.

The second chapter, by Caroline R. Shenk, “The Governance of the Bank for International Settlements, 1973–2020” takes the reader through the changing organizational structure of the BIS. The need to expand the membership of the BIS to reflect the changing structure of international finance while preserving its ability to serve as a forum for central bank cooperation was, it turns out, especially challenging.

The third chapter, by Chris Brummer, “A Theory of Everything: A Historically Grounded Understanding of Soft Law and the BIS,” describes the role of the BIS in promoting and developing the Basel capital standards. These standards are “soft law” because individual nations retain the right to place legally enforceable restrictions on its banks. However, as Brummer explains, the Basel standards have influenced the laws that nations adopt, and so have had an enormous influence.

The fourth chapter, by Andrew Baker, “Tower of Contrarian Thinking: How the BIS Helped Reframe Understandings of Financial Stability,” argues that the BIS played a crucial role in the development and promulgation of the concept of “macroprudential regulation.” This is the idea that, for example, capital requirements for banks should be changed over the course of the business cycle, ratcheting up during economic expansions and down during contractions, thus (hopefully) moderating the business cycle and preventing financial crises.

In the fifth chapter, Barry Eichengreen furthers the discussion of the evolution of the BIS’s thinking about international financial markets and regulation including macroprudential regulation. The chapter is based on a close reading of the annual reports of the BIS and other sources, providing a good example of what can be accomplished through meticulous scholarship.

The final chapter, “The Bank of International Settlements: If It Didn’t Exist, It Would Have to Be Invented (An Insider’s View),” was written by William C. Dudley, who has served as President of the Federal Reserve Bank of New York and on various committees of the BIS, making, he tell us, over 50 trips to Basel. Dudley provides some weighty examples drawn from his own experience of central bank cooperation that were facilitated by the forum provided by the BIS. For example, Dudley argues that in 2008 the rapid deployment of a system of central bank dollar auctions was made possible by personal relationships forged at the BIS.

When I began reading, I was skeptical that a case for the importance of the BIS could be based on its provision of a forum for central bank cooperation and of a center for research. These are both areas where, as I noted, measurement of impact is hard if not impossible. It is, moreover, easy to think of counterfactual substitutes. In the absence of the forum for discussions created by the BIS, would there have been more conferences like the famous conference at Jackson Hole hosted by the Federal Reserve Bank of Kansas City? More Zoom webinars? And in the absence of the BIS research department wouldn’t its researchers have found other places to ply their trade? However, in the end I found the book convincing. Like most economists, I think competition is a good thing, and this appears to be another example. Michael Bordo and Edward Prescott (2019) have argued that the system of competing research departments in Federal Reserve District Banks has proven its worth. It makes sense that the same is true when it comes to international financial agencies.

This clear, judicious, and persuasive volume is well worth reading by someone like myself:  interested in the recent history of international finance, but not an expert. I learned a lot. Moreover, I believe it will be required reading for scholars studying the evolution of the institutional structure of international banking, finance, and monetary policy.


Bordo, Michael D., and Edward S. Prescott. “Federal Reserve Structure, Economic Ideas, and Monetary and Financial Policy.” NBER Working Paper 26098, 2019.

Toniolo, Gianni, and Piet Clement. Central Bank Cooperation at the Bank for International Settlements, 1930-1973. New York: Cambridge University Press, 2005.


Hugh Rockoff is Distinguished Professor of Economics at Rutgers University. His primary research interests include the history of price controls, the U.S. economy in World War II, and U.S. monetary history.

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Subject(s):Economic Planning and Policy
Financial Markets, Financial Institutions, and Monetary History
Macroeconomics and Fluctuations
Geographic Area(s):General, International, or Comparative
Time Period(s):20th Century: Pre WWII
20th Century: WWII and post-WWII