Patrick Wood -- Global Banking: The Bank for International Settlements, Part 2

GLOBAL BANKING: THE BANK FOR INTERNATIONAL SETTLEMENTS
PART 2 of 2

Patrick Wood
October 19, 2005
NewsWithViews.com

Day-to-Day Operations

Acting as a central bank, the BIS has sweeping powers to do anything for its own account or for the account of its member central banks. It is like a two-way power-of-attorney � any party can act as agent for any other party.

Article 21 of the original BIS statutes define day-to-day operations:

1, buying and selling of gold coin or bullion for its own account or for the account of central banks;
2, holding gold for its own account under reserve in central banks;
3, accepting the supervision of gold for the account of central banks;
4, making advances to or borrowing from central banks against gold, bills of exchange, and other short-term obligations of prime liquidity or other approved securities;
5, discounting, rediscounting, purchasing, or selling with or without its endorsement bills of exchange, checks, and other short-term obligations of prime liquidity;
6, buying and selling foreign exchange for its own account or for the account of central banks;
7, buying and selling negotiable securities other than shares for its own account or for the account of central banks;
8, discounting for central banks bills taken from their portfolio and rediscounting with central banks bills taken from its own portfolio;
9, opening and maintaining current or deposit accounts with central banks;
10, accepting deposits from central banks on current or deposit account;
11, accepting deposits in connection with trustee agreements that may be made between the BIS and governments in connection with international settlements.;
12, accepting such other deposits that, as in the opinion of the Board of the BIS, come within the scope of the BIS� functions.[1]

The BIS also may

1, act as agent or correspondent for any central bank
2, arrange with any central bank for the latter to act as its agent or correspondent;
3, enter into agreements to act as trustee or agent in connection with international settlements, provided that such agreements will not encroach on the obligations of the BIS toward any third parties.[2]

Why is "agency" an important issue? Because any member of the network can obscure transactions from onlookers. For instance, if Brown Brothers, Harriman wanted to transfer money to a company in Nazi Germany during WWII (which was not "politically correct" at that time), they would first transfer the funds to the BIS thus putting the transaction under the cloak of secrecy and immunity that is enjoyed by the BIS but not by Brown Brothers, Harriman. (Such laundering of Wall Street money was painstakingly noted in Wall Street and the Rise of Hitler, by Antony C. Sutton.)

There are a few things that the BIS cannot do. For instance, it does not accept deposits from, or provide financial services to, private individuals or corporate entities. It is also not permitted to make advances to governments or open current accounts in their name.[3] These restrictions are easily understood when one considers that each central bank has an exclusive franchise to loan money to their respective government. For instance, the U.S. Federal Reserve does not loan money to the government of Canada. In like manner, central banks do not loan money directly to the private or corporate clients of their member banks.

How Decisions are Made

The board of directors consist of the heads of certain member central banks. Currently, these are:

Nout H E M Wellink, Amsterdam (Chairman of the Board of Directors)
Hans Tietmeyer, Frankfurt am Main (Vice-Chairman)
Axel Weber, Frankfurt am Main
Vincenzo Desario, Rome
Antonio Fazio, Rome
David Dodge, Ottawa Toshihiko Fukui,
Tokyo Timothy F Geithner, New York
Alan Greenspan, Washington
Lord George, London
Herv� Hannoun, Paris
Christian Noyer, Paris
Lars Heikensten, Stockholm
Mervyn King, London
Guy Quaden, Brussels
Jean-Pierre Roth, Z�rich
Alfons Vicomte Verplaetse, Brussels[4]

Of these, five members ( Canada, Japan, the Netherlands, Sweden and Switzerland) are currently elected by the shareholders. The majority of directors are "ex officio," meaning they are permanent and are automatically a part of any sub-committee.

The combined board meets at least six times per year, in secret, and is briefed by BIS management on financial operations of the bank. Global monetary policy is discussed and set at these meetings.

It was reported in 1983 that there is an inner club of the half dozen central bankers who are more or less in the same monetary boat: Germany, U.S., Switzerland, Italy, Japan and England.[5] The existence of an inner club is neither surprising nor substantive: the whole BIS operation is 100% secret anyway. It is not likely that members of the inner club have significantly different beliefs or agendas apart from the BIS as a whole.

How the BIS works with the IMF and the World Bank

The interoperation between the three entities is understandably confusing to most people, so a little clarification will help.

The International Monetary Fund (IMF) interacts with governments whereas the BIS interacts only with other central banks. The IMF loans money to national governments, and often these countries are in some kind of fiscal or monetary crisis. Furthermore, the IMF raises money by receiving "quota" contributions from its 184 member countries. Even though the member countries may borrow money to make their quota contributions, it is, in reality, all tax-payer money.[6]

The World Bank also lends money and has 184 member countries. Within the World Bank are two separate entities, the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The IBRD focuses on middle income and credit-worthy poor countries, while the IDA focuses on the poorest of nations. In funding itself, the World Bank borrows money by direct lending from banks and by floating bond issues, and then loans this money through IBRD and IDA to troubled countries.[7]

The BIS, as central bank to the other central banks, facilitates the movement of money. They are well-known for issuing "bridge loans" to central banks in countries where IMF or World Bank money is pledged but has not yet been delivered. These bridge loans are then repaid by the respective governments when they receive the funds that had been promised by the IMF or World Bank.[8]

The IMF is the BIS' "ace in the hole" when monetary crisis hits. The 1998 Brazil currency crisis was caused by that country's inability to pay inordinate accumulated interest on loans made over a protracted period of time. These loans were extended by banks like Citigroup, J.P. Morgan Chase and FleetBoston, and they stood to lose a huge amount of money.

The IMF, along with the World Bank and the U.S., bailed out Brazil with a $41.5 billion package that saved Brazil, its currency and, not incidentally, certain private banks.

Congressman Bernard Sanders (I-VT), ranking member of the International Monetary Policy and Trade Subcommittee, blew the whistle on this money laundry operation. Sander's entire congressional press release is worth reading:

IMF Bailout for Brazil is Windfall to Banks, Disaster for US Taxpayers Says Sanders

BURLINGTON, VERMONT - August 15 - Congressman Bernard Sanders (I-VT), the Ranking Member of the International Monetary Policy and Trade Subcommittee, today called for an immediate Congressional investigation of the recent $30 billion International Monetary Fund (IMF) bailout of Brazil.

Sanders, who is strongly opposed to the bailout and considers it corporate welfare, wants Congress to find out why U.S. taxpayers are being asked to provide billions of dollars to Brazil and how much of this money will be funneled to U.S. banks such as Citigroup, FleetBoston and J.P. Morgan Chase. These banks have about $25.6 billion in outstanding loans to Brazilian borrowers. U.S. taxpayers currently fund the IMF through a $37 billion line of credit.

Sanders said, "At a time when we have a $6 trillion national debt, a growing federal deficit, and an increasing number of unmet social needs for our veterans, seniors, and children, it is unacceptable that billions of U.S. taxpayer dollars are being sent to the IMF to bailout Brazil."

"This money is not going to significantly help the poor people of that country. The real winners in this situation are the large, profitable U.S. banks such as Citigroup that have made billions of dollars in risky investments in Brazil and now want to make sure their investments are repaid. This bailout represents an egregious form of corporate welfare that must be put to an end. Interestingly, these banks have made substantial campaign contributions to both political parties," the Congressman added.

Sanders noted that the neo-liberal policies of the IMF developed in the 1980's pushing countries towards unfettered free trade, privatization, and slashing social safety nets has been a disaster for Latin America and has contributed to increased global poverty throughout the world. At the same time that Latin America countries such as Brazil and Argentina followed these neo-liberal dictates imposed by the IMF, from 1980-2000, per capita income in Latin America grew at only one-tenth the rate of the previous two decades.

Sanders continued, "The policies of the IMF over the past 20 years advocating unfettered free trade, privatizing industry, deregulation and slashing government investments in health, education, and pensions has been a complete failure for low income and middle class families in the developing world and in the United States . Clearly, these policies have only helped corporations in their constant search for the cheapest labor and weakest environmental regulations. Congress must work on a new global policy that protects workers, increases living standards and improves the environment."

One can surmise that a financial circle exists where the World Bank helps nations get into debt, then when these countries can't pay their massive loans, the IMF bails them out with taxpayer money -- and in the middle stands the BIS, collecting fees as the money travels back and forth like the ocean tide, while assuring everyone that all is well.

BIS dumps gold-backed Swiss Francs for SDR's

On March 10, 2003, the BIS abandoned the Swiss gold franc as the bank's unit of account since 1930, and replaced it with the SDR.

SDR stands for Special Drawing Rights and is a unit of currency originally created by the IMF. According to Baker,

"The SDR is an international reserve asset, created by the IMF in 1969 to supplement the existing official reserves of member countries. SDR's are allocated to member countries in proportion to their IMF quotas. The SDR also serves as the unit of account of the IMF and some other international organizations. Its value is based on a basket of key international currencies."[9]

This "basket" currently consists of the euro, Japanese yen, pound sterling and the U.S. dollar.

The BIS abandonment of the 1930 gold Swiss franc removed all restraint from the creation of paper money in the world. In other words, gold backs no national currency, leaving the central banks a wide-open field to create money as they alone see fit. Remember, that almost all the central banks in the world are privately-held entities, with an exclusive franchise to arrange loans for their respective host countries.

Regional and Global Currencies: SDR's, Euros and Ameros

There is no doubt that the BIS is moving the world toward regional currencies and ultimately, a global currency. The global currency could well be an evolution of the SDR, and may explain why the BIS recently adopted the SDR as its primary reserve currency.

The Brandt Equation, 21st Century Blueprint for the New Global Economy notes, for instance, that

Since the SDR is the world's only means of meeting international payments that has been authorized through international contract, "The SDR therefore represents a clear first step towards a stable and permanent international currency"[10] [bold emphasis added]

As to regional currencies, the BIS has already been hugely successful in launching the euro in Europe. Armed with new technical and social know-how, the BIS' next logical step is to focus on America and Asia.

For instance, according to BIS Papers No. 17, Regional currency areas and the use of foreign currencies,

"Canada, Mexico and the United States are members of the trade group NAFTA. Given the high proportion of Canada and Mexico�s trade with the United States, a NAFTA dollar or �Amero� has been proposed by some Canadian academics such as Grubel (1999). See also Beine and Coulombe (2002) and Robson and Laidler (2002)."[11]

Assuming that NAFTA permanently identifies Canada, the U.S. and Mexico as one trading block, then North America will look like the European Union and the Amero will function like the Euro. All of the work put into the SDR would be perfectly preserved by simply substituting the Amero for the U.S. dollar when they choose to bring the Amero to ascendancy over the dollar.

For those American readers who do not grasp the significance of the adoption of the euro by European Union countries, consider how one American globalist describes it.

C. Fred Bergsten is a prominent and core Trilateral Commission member and head of the Institute for International Economics. On January 3, 1999, Bergsten wrote in the Washington Post

"The adoption of a common currency is by far the boldest chapter of European integration. Money traditionally has been an integral element of national sovereignty ...and the decision by Germany and France to give up their mark and franc ...represents the most dramatic voluntary surrender of sovereignty in recorded history. The European Central Bank that will manage the euro is a truly supranational institution".[12] [bold emphasis added]

Bergsten will have to rephrase this when the U.S. gives up the dollar for the amero -- that will become the most dramatic voluntary surrender of sovereignty in recorded history!

Conclusions

Our credo is "Follow the money, follow the power." This report has endeavored to follow the money. We find that:

The BIS is central bank to all major central banks in the world
It is privately owned by central banks themselves, most of whom are also private
It was founded under questionable circumstances by questionable people
It is accountable to no one, especially government bodies
It operates in complete secrecy and is inviolable
Movement of money is obscured and hidden when routed through the BIS
The BIS is targeting regional currency blocks and ultimately, a global currency
It has been hugely successful at building the New International Economic Order, along with its attendant initiatives on global governance.

As to "follow the power," another paper will more fully explore the influence of power that the BIS exerts over other banks, nations and governments. For your own consideration in the meantime, Proverbs 22:7 provides a useful compass: "The rich rule over the poor, and the borrower is servant to the lender".

NOTE: Carl Teichrib, World Research Library Senior Fellow, contributed to this report.

Click Here For Part-----> 1

Footnotes:

1, Baker, op cit, p. 26-27
2, ibid, p. 27
3, BIS, The BIS in profile, Bank for International Settlements flyer, June, 2005
4, BIS, Board of Directors, www.bis.org/about/board.htm
5, Epstein, Ruling the World of Money, Harper's Magazine, 1983
6, IMF web site, http://www.imf.org
7, World Bank web site.
8, Baker, op cit, p. 141-142
9, IMF web site
10, The Brandt Equation: 21 st Century Blueprint for the New Global Economy. The Brandt Proposals � A Report Card: Money and Finances.
11, BIS, Regional currency areas and the use of foreign currencies, BIS Papers No. 17, September, 2003
12, Washington Post, The Euro Could Be Good for Trans-Atlantic Relations, C. Fred Bergsten, January 3, 199

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Patrick M. Wood is editor of The August Review, which builds on his original research with the late Dr. Antony C. Sutton, who was formerly a Senior Fellow at the Hoover Institution for War, Peace and Revolution at Stanford University. Their 1977-1982 newsletter, Trilateral Observer, was the original authoritative critique on the New International Economic Order spearheaded by members of the Trilateral Commission.

Their highly regarded two-volume book, Trilaterals Over Washington, became a standard reference on global elitism. Wood's ongoing work is to build a knowledge center that provides a comprehensive and scholarly source of information on globalism in all its related forms: political, economic and religious.

E-Mail: pwood@augustreview.com

Web Site: www.AugustReview.com

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It is not surprising that the BIS, its offices, employees, directors and members share an incredible immunity from virtually all regulation, scrutiny and accountability.