1 - One Hundred and Thirty Years of Central Bank Cooperation: A BIS Perspective

Summary

INTRODUCTION

The idea that an “international bank” would facilitate central bank cooperation dates back to the late nineteenth century (Toniolo 2005: 20–23). It was officially revived in the immediate postwar period, particularly at the 1922 Genoa economic conference. In keeping with the vision of Governor Montagu Norman of the Bank of England, the Bank for International Settlements (BIS), established in 1930 to facilitate the transfer of German reparations, was also given the mission of promoting central bank cooperation. Since July 1931, when the Hoover moratorium put an end to reparations, central bank cooperation has been the main objective of the BIS.

The 1935 BIS Annual Report asked: “Cooperation on what? With what objectives in view? How?” With the insight of 130 years of history, this chapter tries to answer three questions: How did changing international monetary and financial conditions shape the targets and tools of central bank cooperation? What conditions determined its intensity? Did a structured organization, such as the BIS, make a difference?

This chapter will not discuss the desirability of cooperation. We focus primarily on the process, rather than the ultimate outcomes of cooperation, and we do so from a positive rather than normative perspective. In other words, while we fully recognize that cooperation based on the wrong “model” of how the economy works or on the wrong analysis of current and future conditions can have perverse effects, we do not make such assessments in the scope of our analysis.