U. N. WATCH
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2000 BANK FOR INTERNATIONAL SETTLEMENTS REPORT
The rusty colored building which houses the Bank for International Settlements-BIS in Basle, Switzerland looks like any other round office building. A small sign affixed to the wall by the steps leading to its front glass doors tells you it is private property. Other than that you would never think twice about this building as there is nothing specific which marks it as being the most important bank and building in the world.
When the BIS holds its two-hour annual meeting, those who control the world's monetary system, the central bank ministers-- unlike the presidents and prime ministers who attend United Nations conferences--do not have motorcades or limousines which they ride in, but walk to the BIS from the local hotels where they stay.
In the book, Confidence Game by Steve Solomon (Simon & Schuster, NY: 1995), he provides a favorable history of the world's central banks and justifies over and over again the need for their existence. The culprit responsible for the current problems with currency imbalances is globalization which Solomon describes as:
The uncontrolled, high-speed gyrations of stateless money unhinged from economic fundamentals or national economic policies [which] has transformed the international monetary system from a smooth....mechanism that anchors a harmonious world political and economic order into a fully floating, private nonsystem driven by the roller-coaster shifts in focus....of the....global financial investors. All models of democratic capitalism....are in distress because of the new phenomenon of uncontrolled stateless money. No country can solve the challenge singly. Nor can any country cut itself off to escape its effects. The fates of all democratic capitalist nations are dependent upon how well we can collectively civilize stateless money within a new international compact of world monetary rules, norms, and policy (page 509) (emphasis added).
Solomon says the solution envisioned by many experts is, "the eventual, long-term evolution to a single world monetary policy based on a single or a few freely interchangeable world reserve currencies, managed by a SUPRANATIONAL CENTRAL BANK" (emphasis added). He laments, "But how to get there from here" (ibid. 509).
Highlighting the path to a single world monetary policy is the need to solve the effects of the globalization process which was created by the same people who wish to solve it. The Bank for International Settlements designed the present borderless flow of monies between countries when it pushed for the de- regulation of monetary laws of the major North American, European, and Asian countries. By tearing down national financial borders, they created the ability for $1.2 trillion daily to flow around the world (uncontrolled stateless money) looking for the highest interest or fastest currency play. In the process of solving the problem, the BIS will then extend its tentacles down to the local level (which are not controlled or supervised by this supranational organization) for a complete takeover of the world's banking system through the Basle Core Principles-- without even one bullet being fired---a fait accompli. By the time the average citizen has figured this out--much less those who are elected to Congress--it will be too late.
History records for us a number of instances when the world was ruled by large empires. The Tower of Babel was an attempt at political unification, no mention is made of economic union. The empires of Babylon, Assyria, Greece, and Rome were world empires both politically and economically. Napoleon in the last century sought to unite Europe with one monetary and political system. Until this century, there had not been an attempt to integrate all the countries of the world economically. This changed with the passage of the Federal Reserve Act in 1913. As a result of that legislation, the finances and the economic future of the United States was shifted from the authority of the Congress and the U.S. Treasury to a private corporation called the Federal Reserve. America was the last major country to change over to a central bank system which would help facilitate the quest for a new world economic order.
Sixty-seven years later, the above economic integration was greatly enhanced by the de-regulation of the financial and banking industry in 1980 (which led to $1.2 trillion moving around the world daily.) In addition the 1987 stock market crash and the failures of the Herstatt Bank, Franklin Bank, (Italian) Banco Ambrosiano, Barings Bank, etc. have provided the "need" to fix the problem. As a result of these failures, whether planned or real, the Bank for International Settlements has determined that the strength of the international economic system lies with the supervision of not only the world's banks but with insurance companies and brokerage firms as well since they are all inter-related. Whoever supervises the banks has final say as to who runs the world, for they will determine everything financial in a country.
A New World Economic Order
A new world economic order has been evolving since 1930. First came the control of a country's finances through central banking, then the establishment of the BIS, then the creation of the World Bank, the International Monetary Fund, the United Nations, the Group of Seven (or Eight), and the World Trade Organization.
During a visit to the museum of the Bank of England in London recently, they had the history of the Bank on display, part of which follows:
The proposal for a 'Bank of England' emerged from a mass of....projects circulating at the beginning of the 1690's. William Patterson, a Scotsman, is generally held to be its originator. A colorful figure, much travelled, he was a key and regular promotor of financial projects. [He] proposed raising 1.2 million British pounds to be lent to the government at 8% on the condition that the subscribers were incorporated as a joint stock company [private corporation] with the title, 'Bank of England.' The particular novelty is that there was no fixed time period for the loan and that interest would be paid in perpetuity. In effect this meant the creation of a permanent national debt. (emphasis added) Patterson was backed by a powerful group of City merchants and also by Charles Montagu, one of the Commissioners of the Treasury, who persuaded the government to introduce a Bill embodying the scheme. The Act was passed in April, 1694."
Controlling the world's monetary system
If you could control the monetary system of the world, how would you do it? Very simply, you first start with your own country or a country which would be easy to persuade. Then if you went systematically around the world to other countries doing the same thing, it would not be long before the control of the world's monetary system would be in the hands of a few men whose wealth and power would grow with the size and number of countries they control and the size of the country's debt, which would now run in perpetuity, providing an unending stream of income for generations to the lenders and bondage to the debtor!
Has this happened yet? Unfortunately yes. The first country to allow a private corporation to run their monetary system was Sweden. Their central bank, the Sveriges Riksbank was founded in 1668. Central banking originated in Sweden. Other countries allowing a private corporation to control their monetary system include: Bank of France in 1803, Reichsbank (Bundesbank-Germany) in 1870, the Bank of Japan in 1882, and the Bank of Italy in 1893. Let us not forget that it was Andrew Jackson who refused to renew the charter for the first central bank in America in 1832.
The Federal Reserve - America's Central Bank
After much maneuvering, distortion and lies, the United States monetary system was given over to the Federal Reserve, a private corporation, on December 23, 1913 when a small group of powerful senators stayed behind to vote on the Federal Reserve Act while the rest of the Senate went home unsuspectingly for the Christmas holiday. Today, there is not one country in the world that does not have a "central bank" or private corporation managing their monetary system. The Federal Reserve is said to be owned by the Rothschild Bank of England, Lazard Brothers Banks of Paris, Lehman Brothers Bank of News York, Chase Manhattan Bank of New York, Goldman, Sachs Bank of New York, Kuhn, Leob Bank of New York and others. It should be noted that one of the reasons why the people of America cannot forgive themselves the interest on the federal debt is because they do not owe it to themselves, they owe it to a private corporation, the Federal Reserve.
The Bank for International Settlements - The Central Bank's Bank
The shift in world power from independent nation-states to one controlled politically and economically from the international level has been gradual. In 1920 at the Paris Peace Conference there was a movement to have all the countries of the world voluntarily join the League of Nations. Our Senate at the time would not ratify this idea. However in 1945, the Senate ratified the United Nations Charter. It was then that American sovereignty started to disintegrate as we became part of a new form of political power which would gradually integrate us with the other countries of the world into a new world order.
That same year at the International Financial Conference in Brussels, which was under the umbrella of the League of Nations, finance ministry officials, central banker and private bankers from nearly 40 countries called for every country to have a central bank. In looking to bail out war torn Europe, it was the Financial Committee of the League of Nations, guided by Britain's Montagu Norman, which helped Europe get back on its feet by using Norman's model of central banking and the men of his choice. Interestingly, it was Montagu Norman who led the call throughout the 20's for central bank autonomy, i.e. freedom from political pressure. It would not be until the 1990's that his dream would be achieved. (Marjorie Deane and Robert Pringle, The Central Banks, Penguin Books USA: 1994, 56-61)
It was the Young Plan, sponsored by America and named after the originator who then became the chairman of General Motors, which set up the Bank for International Settlements in 1930. The formation of the BIS basically "internationalized" central banks as it provided a location for the central bank ministers to operate from. Some say that the BIS was to be an offspring of the League of Nations. Located in Basle, Switzerland, "the BIS was told it should be a bank which above all was to promote cooperation among central banks." (Ibid, 67)
The seven central banks which formed the BIS were: the Bank of England, the Bank of France, the Bank of Belgium, the German Bundesbank, the Bank of Italy, the Bank of Switzerland and the Bank of Japan. At its inception the BIS, according to the 1997 Annual Report, was given the legal structure of a limited company with issued share capital. It is an international organization governed by international law with privileges and immunities necessary for its performance of functions. This legal personality of the BIS and privileges/immunities was confirmed in the Headquarters Agreement concluded with the BIS and the Swiss Federal Council on February 10, 1987. (emphasis mine)
The World Bank and IMF
The additional infrastructure added in July, 1944 was the World Bank and International Monetary Fund which came into being at the Bretton Woods Monetary Conference in New Hampshire. These institutions were the vision of both socialist John Maynard Keynes from Britain and Assistant Secretary of the Treasury Harry Dexter White (who was later convicted as a Soviet spy). Although these institutions would initially provide the funds to re- build war-worn Europe, they have evolved into very powerful organizations in the last fifty-some years with greater and greater power. Currently there are plans to provide the IMF with additional powers to make it "a world central bank." The World Bank, which besides lending money for development projects, establishes stock exchanges in third world countries, brings stock to market on the international markets and is the largest syndicator of international bonds in the world. The Bank also work very closely with Prince Charles and to establish and facilitate the radical environmental mandates of the United Nations in all parts of the world.
The Group of Seven
In 1975 the Group of Five was formed. The Group of Five came into being after the world's currency markets were forced to close twice in 1973. Today it is known as the Group of Seven (Eight) and is comprised of the top industrialized countries of the world: the United States, Canada, Germany, Japan, Italy, France, and Great Britain. Russia became a full partner in June, 1998. The Group of Seven (less Russia) is considered a "global board of directors." As a result of their economic power, they basically set the agenda which the rest of the countries in the United Nations follow.
As a result of the above, the countries of the world have become nothing but pawns in the hands of powerful central bankers who rule and control the presidents and prime ministers of the world. For example, it should be noted that Korea, Thailand, and Malaysia wanted to maintain some economic sovereignty by keeping control of their major banks and industries. This was not in line with the World Trade Organization Financial Services Agreement which called for financial integration of banks, insurance companies, and brokerage firms. Almost over night the currencies of these countries were devalued and their economies rendered insolvent. Did this happen by "chance" or was it planned?
Dr. Carrol Quigley, Bill Clinton's mentor at Georgetown University, said this about the Bank for International Settlements in his book Tragedy and Hope,
....[T]he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalistic fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. The BIS as a private institution was owned by the seven chief central banks and was operated by the heads of these, who together formed its governing board. The BIS is generally regarded as the apex of the structure of financial capitalism whose remote origins go back to the creation of the Bank of England in 1694 and the Bank of France in 1803" (Tragedy and Hope, 324-325) (emphasis added).
The BIS Expands
In 1994, the Federal Reserve System was welcomed to occupy the two seats on the Board of Directors to which the central bank of the United States had been entitled since 1930. Alan Greenspan became an ex-officio member of the Board and appointed William J. McDonough, President of the New York Federal Reserve, to serve as a member of the BIS Board for a period of three years.
In September, 1996, the Board of Directors, compromised of the Group of Ten, admitted nine new members from the central banks of: Brazil, China, Hong Kong, India, Korea, Mexico, the Russian Federation, Saudia Arabia and Singapore. In 1997, four additional central banks were invited to buy into the BIS: Bosnia and Herzegovina, Croatia, Macedonia and Slovenia. Today a total of 120 central banks and international financial institutions use the BIS as a bank with 45 central banks having the rights of representation and voting at the General Meetings. In essence, they are a "United Nations of central banks."
In addition, the BIS opened up a Representative Office for Asia and the Pacific in Hong Kong in 1998. It's purpose is to strengthen further relations and information sharing among the region's central banks and monetary authorities.
The BIS is engaged in many activities, all of which, they say, are to "foster international monetary cooperation." First, the BIS is a forum for international monetary cooperation. Since 1971, the Group of Ten Central Bank Governors meet on a monthly basis at the BIS to determine the direction of international monetary policies. The Bank has a Committee of Experts on Gold and Foreign Exchange which monitor ongoing financial developments as they relate to central bank polices and operations. In 1974, the Basle Committee on Banking Supervision was set up. They maintain cooperation with other regional central bank organizations such as the Gulf Cooperation Council, the South African Development Community, and the Central Banks of South East Asia, New Zealand and Australia, to name a few. The BIS offers technical assistance for the central banks of eastern Europe, the former Soviet Union and some Asian countries. They also participate with the World Bank, its various regional banks, the International Monetary Fund, and the Organization for Economic Cooperation and Development in a training institution called the Joint Vienna Institute which was set up in 1992. They also organize meetings of central bank economics and other experts on a variety of matters. On a quarterly basis, they publish, "International Banking and Financial Market Developments."
In addition, the BIS performs functions as Trustee, Fiscal Agent or Depositary with regard to a number of international loan agreements. They also perform the functions for the European Payments Union, and function as a collateral agent.
The BIS has expanded their auspices as a result of the globalization process, the rise of the derivatives market, and what appears to be the standardization of monetary policy on a worldwide basis to coordinate both interest rates and growth in GDP. As a result of the globalization process, i.e. the tearing down of financial and investment laws and regulations between countries, $1.2T flows around the world on a daily basis looking for the highest return or fastest play to net the greatest profits. Banks, financial firms, private speculators and corporations play this game of "global roulette." This has increased the role which the BIS plays in the global markets as it has become concerned with "banking supervision" which is what the rest of this report will concentrate on. Whoever supervises the banks has ultimate control and say in the affairs of the country and the bank.
Background to The Basle Committee on Banking Supervision
The BIS established the Basle Committee on Banking Supervision in 1975. It consists of senior representatives of bank supervisory authorities from Belgium, Canada, France, Germany, Italy, Japan, Luxembourg, Netherlands, Sweden, Switzerland, the UK, and the U.S. As a result of the Herstatt Bank collapse in 1974, the BIS approved the Basle Concordat. For some reason the contents of this document were kept secret until March, 1981. The Concordat layed out responsibilities for international banks, a new first for the world. With this Concordat, a supranational bank (the BIS) was issuing orders for the rest of the national banks of the world. The BIS realized that the Concordat would work only if all central bankers were capable and willing to execute it and therefore it would have to be endorsed and implemented by all. In July, 1982, Italy's Banco Ambrosiano collapsed leaving eighty-eight international banks with debts of $600 million. In response, the Basle supervisors drew up an amended second Concordate in 1983 which emphasized the spirit of shared responsibility and the adequacy of each other's supervision - that of the parent and host country (Solomon, Confidence Games, 119).
Within six months of the 1987 Stock Market Crash, the Basle Capital Accord was endorsed by 90 national bank supervisors and implemented by the US, UK, and Japan. In 1988, the Basle Committee issued the Basle Capital Accord which set out minimum capital standards for each bank to have. In other words for an international bank to keep its doors open, it would have to have a minimum amount set aside to require the capital standard. In 1992, with the endorsement of the Group of Ten central bank governors they agreed to apply the minimum standards in the supervision of international banking groups.
In April, 1990 the Committee reviewed the supplement to the Concordat which provided guidance for ongoing contract and collaboration among supervisory authorities and spelled out the extent of information sharing among the supervisory authorities. While some of this oversight may be needed, if America is a sovereign nation, then these guidelines should come from our Congress and not a transnational body.
As a result of the breakdown in the European Rate Mechanism in 1992, the Group of Seven became increasingly concerned with not only the movement of $1.2T around the world on a daily basis but also with the stability of the currency markets. In 1993, the Basle Committee created the "Tripartite" which is comprised of bank, securities and insurance regulators which are the Basle Committee on Banking Supervision, the International Organization of Security commissions-IOSCO and the newly created International Association of Insurance Supervisors-IAIS respectively. Both the Basle Committee and the IAIS are located at the BIS while IOSCO is in Montreal. IOSCO considers itself "the United Nations of Securities Regulators (stock exchanges)." Arthur Levitt our Securities and Exchange Commissioner has stated, "There has never been a greater need for us to work together. We (ISOCO) regulate one of the most innovative industries on the face of the earth, whose main commodity--capital--has little regard for national borders. We must expand our cooperation to cover regulatory issues beyond enforcement." (IOSCO meeting, 1996)
In September, 1996, the Basle Committee decided to build on its earlier work by preparing two separate publications: a comprehensive set of Core Principles for Effective Banking Supervision and a Compendium which brings together the existing Basle Committee recommendations, guidelines, and standards (1997 BIS Annual Report, 171-172).
The Core Principles sets out 25 basic Principles that must be in place for a supervisory system to be effective. They cover: (1) preconditions for effective banking supervision, (2) the licensing and structure of institutions; (3) prudential regulations and requirements; (4) methods of ongoing banking supervision; (5) information requirements; (6) the formal powers of supervisors; and (7) cross-border banking.
In looking to understand more clearly the real effect of these "rules of the road," I attended the June, 1998 Annual Meeting of the Bank for International Settlements. There I interviewed Andrew Crockett, Managing Director of the BIS and Charles Lakewood, Deputy Managing Director and Chairman of the Basle Committee on Banking Supervision.
Mr. Crockett responded to my questions on the Basle Core Principles by saying,
What is needed to make sure that the cooperative mechanisms amongst supervisors and regulators are constantly maintained at the most effective level. We have supervisory regulatory responsibilities that are first of all divided on national grounds--inevitable when you have individual nation-states, in many countries it is also divided according to the historical concentration of different financial activities-- insurance regulators, commercial bank regulators, investment bank regulators, and so on. What we are now recognizing in a global financial market is that the boundaries between nation-states and the boundaries between different categories between institutions are becoming blurred so that banks are acquiring insurance companies and vise versa. The banks are going cross-border and acquiring other banks in cross border deals, some times as partners, some times as subsidiaries, some times as complete absorption into the same institution. This creates the multiplicity of organizational forms that need to be regulated and supervised. What we are calling for I think, and I believe the IMF and others are doing the same thing, is that there should be a clear division of--allocation of responsibilities so that first of all institutions which are increasingly working in the fields of other institutions--banks taking on insurance companies-- are subject to the same set of regulations so that nothing falls between the gaps--and also so that there is a clear appreciation on the part of supervisors what their responsibilities are to the stability of the international financial system (emphasis added).
The Asian crisis among other experiences has shown that weaknesses in financial systems can have enormously damaging consequences. What we want to make sure is that international best practice is adopted among all the countries that are likely to be vulnerable and all countries so that we can have comprehensive supervisory structure. Up to now that has not been fully comprehensive. With the development of the Core Principles of the Basle Committee on Banking Supervision and the extension of similar principles to other kinds of activities and other kinds of financial institutions to other supervisors that should become more and more possible (emphasis added).
When I asked, "Who do they report to?" Crockett responded:
Well this is a good question a question to which there is no answer. It is not a formal grouping with a mandated or an international treaty. The Basle on Banking supervision reports to the Governors of the Group of Ten countries. That's our understanding, not a formalized arrangement. It is basically a forum whereby national experts can come together to set standards and so too is the IAIS, those are not organizations that report to any higher body such as the IMF or BIS or Min. of finance but are associations of equal supervisors from their national authorities. (emphasis added)
In an indepth follow-up interview with Charles Lakewood, he described the process of supervision this way:
For about 15 or 20 years, bank supervision was a kind of low level technical matter where the central banks through the Basle Committee did the technical work. It is only with the Capital Accord that it became more high profile. There weren't any competitors to the Basle Committee for some years. In the last two to three years there have been a number of competitors coming up. We have seen the IMF/World Bank get into supervision in a much bigger way. They have recruited a lot of high powered people. Individually those people are strong but they don't have a mechanism for decision making. What the IMF can or will do or the World Bank can or will do in their constituencies is the real crux of the matter. What we are trying to do is make sure that the advice of the World Bank or IMF is consistent with the best practice and the lessons we have learned from dozen and dozen of events.
He stated that the members of the Basle Committee are solo meetings of the Group of Ten alone with the exception of an observer from the European Union. Furthermore he stated with regard to the role of the World Bank and the IMF that they are "playing an increasingly important role." The Basle Committee has created two new groups to monitor the implementation of the principles. One is quite small with the IMF/World Bank in that group with eighteen countries and the EU.
The whole truth about the Basle Core Principles is to be found in the matter of compliance. If these are only "guidelines or recommendations," as they have said, then why would they look to eventually punish and penalize a country which does not adhere to these principles? In response to a question on the kind of penalty for non-implementation, Lakewood said this, "Compliance is going to be difficult. If compliance is going to be difficult, then penalties and punishments are even more difficult. At this point in time we are just trying to get the thing started and encourage countries to look at these and try and improve the structure they are working with. Further down the road, we will have to make that decision as to what to do when people are plainly non-complying."
When I was in London for the Group of Eight Finance Ministers meeting, I asked Secretary Robert Rubin if the adaptation of the Core Principles would have to go through Congress and he replied no. When a lady friend of mine told Congresswoman Helen Chenoweth what Rubin had said, my friend told me that her eyes got as big as saucers and she exclaimed, "He can't do that. He's by-passing Congress!"
Conclusion - "HOW TO GET THERE FROM HERE"
As a result of the globalization process and the monetary uncertainty which has been created by a floating system of exchange, there would have to be some type of global overseerer. However, the more power this overseerer is given, the more power they have over nations and kings. In addition, there is no provision to abide by the U.S. Constitution or that of any other country's because a new set of rules has been set up which the nation-states have ceded their rights to. The Bank for International Settlements, as a result of what they are, have extreme power. Now they are looking to extend that power from the global to the local as they apply the Basle Core Principles to local banks worldwide. The following are several additional proposals for continued global monetary reform as found in Confidence Games:
1. Putting a uniform transaction tax of .5% on all spot foreign exchange transactions, including deliveries on futures contracts and options. This is called the "Tobin Tax" and has been supported by the United Nations as early as 1995 when at the United Nations Social Summit in Copenhagen, the United Nations tried to raise awareness for it by making it part of most of their press briefings and workshops. At the Group of Eight leaders meeting in Birmingham, a group protesting against the Group of Eight sponsored a workshop on "Alternative Economics." I interviewed one of their leaders who was touting the Tobin Tax. When I asked what they would use the estimated $1.5T in revenues for, he told me it would be used for environmental purposes and perhaps be put in a mutual fund to be managed by the United Nations. When I asked England's Prime Minister Tony Blair to comment on the Tobin Tax, he replied that it wasn't on the agenda.
2. Create a buffer mechanism so that nations could regain more flexibility to pursue divergent monetary policies. This too would raise as much as $13T a year in revenue which could be turned over to the BIS to pursue interventions to stabilize currencies or carry out a "lender of last resort" position.
3. Create a type of "FDIC insurance" on foreign exchange transactions. When a country buys a foreign currency, have them put a small percentage in a non-interest bearing account with its central bank.
Is it a coincidence that written on the walls of the Rathaus, the Townhall, in Basle which dates back to 1601 are these words:
FREEDOM IS GREATER
THAN SILVER AND GOLD!