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Why was the BIS set up?
|Board of Directors' unofficial first meeting
in Basel, April 1930
The Bank for International Settlements was established in 1930 to administer
("settle") the reparation payments imposed on Germany under the Treaty of
Versailles following the First World War. It was also envisaged that the BIS
would provide central banks with an institutional forum for cooperation. The
Bank's name is derived from this original role. Amid the financial and
economic crisis of the early 1930s, the matter of reparations soon faded,
allowing the BIS to focus its activities entirely on cooperation among central
The choice of Switzerland for the seat of the BIS was a compromise by those
countries that established the BIS: Belgium, France, Germany, Italy, Japan, the
United Kingdom and the United States. When consensus could not be reached on
locating the Bank in London, Brussels or Amsterdam, the choice fell on
Switzerland. An independent, neutral country, Switzerland offered the BIS less
exposure to undue influence from any of the major powers.
Within Switzerland, Basel was chosen largely because of its location, with
excellent railway connections in all directions, especially important at a time
when most international travel was by train.