G-10, Or Who Manages the Bank for International Settlements
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G-10, Or Who Manages the Bank for International Settlements


NEW YORK – February, 14, 2019

The most important principle in the world of finance is secrecy. Information about certain decisions, about specific operations, about the plans of financial institutions, about their situation is hidden not only from ordinary citizens, but also from state institutions with control rights. The world of finance is a second reality, a parallel world that is increasingly influencing our daily lives, the first reality. And the stricter secrecy is, the greater the effectiveness of this influence.

The textbooks on economics usually name only two international centers that manage global finance--the International Monetary Fund (IMF) and the Bank for International Settlements (BIS). We know quite a lot about the first. As for the BIS, it is a much more closed organization. It is called “the club of central banks” or “Central Bank of Central Banks.” This organization was created in 1930. During the Second World War, it actively collaborated with Nazi Germany. At the end of the war, the victorious countries decided to eliminate it, but failed to implement the decision. To date, 60 central banks are members of the BIS.

However, the IMF and the BIS do not include everyone who governs global finance. There are other global financial management centers. They are spoken about extremely rarely. We have already written about the informal organization of the G-30, which is one of the supranational control centers of the global financial system.

There is another supranational organization in the world of finance that even many professionals are not aware of; information about it seeps into open sources in homeopathic doses. It is the G-10, or Group of Ten. It was formed in 1962 in Paris, when a dozen IMF member states (Belgium, Canada, France, Italy, Japan, the Netherlands, the United Kingdom, the United States, Sweden, Germany) signed the General Agreement on Borrowings (GAB). Then the “dozen” pitched in $6 billion for IMF loans. After 1962, the G-10 meetings began to be held regularly. In 1964, Switzerland joined the group, but the name of the G-10 was not changed. The Bank of International Settlements, the European Commission, the IMF and the Organization for Economic Cooperation and Development (OECD) participate in the group as observers. Some experts believe that it was the G-10 that prepared the plan for dismantling the Bretton Woods monetary system and replacing it with the Jamaican system in 1976.

Now the G-10 is almost forgotten. More often remembered is  its brainchild - the General Agreement on Loans, which in a modified form still exists. By the middle of last year, the amount of loans under the General Agreement amounted to $26 billion.

At meetings of the G-10, decisions on key rates are coordinated, agreements on currency swaps between central banks are signed, and acceptable ranges of currency fluctuations are determined. G-10 is first of all a cartel of central banks.

Part of the meetings of members of the "tens" takes place under the roof of the BIS. The G-10 not only meets in Basel, it actually controls the Bank for International Settlements. The information on the BIS website that the group meets once a year on the margins of the IMF-WB summit looks funny. And about the fact that the leaders of the group’s central banks regularly meet in the central office of the BIS in Basel - there’s not a word.

Some light is shed on the activities of the G-10 by the works of Edward Epstein ("Ruling the World of Money"), Ellen Brown ("The Tower of Basel: secretive plans for the issuing of a global currency"), Adam Lebora ("The Tower of Basel: The Shadowy History of the Secret Bank that Runs the World"). The most interesting work of the last author, a British journalist, was published in 2013.

The BIS organizes a large number of meetings with the participation of heads and senior officials of the central banks and financial regulators of the member states. According to the latest annual report of the BIS for 2017/18, 278 meetings with 9,514 participants were held, In particular, 187 meetings (6,213 participants) were held at the central office of the BIS in Basel.

There are three types of regular meetings that are held at the Bank for International Settlements every two months with the participation of the heads of Central banks--members of the BIS. These are the Global Economy Meeting, the Economic Consultative Committee meeting and the All Governors' Meeting. All of these meetings take place one after the other for two or three days.

The G-10 hides under the guise of the Economic Consultative Committee (ECC). Sometimes, up to one and a half dozen central banks participate in the meetings of the ECC, but the core of the eleven original members of the G-10 remains unchanged until today. The ECC makes recommendations and reviews applications for membership in the BIS. The Economic Consultative Committee also oversees the work of the three BIS committees that deal with the global financial system, payment systems, and international markets. ECC is also preparing proposals for the Global Economy Meeting and the All Governors' Meeting.

The cycle of two-month meetings in Basel begins with a meeting of the ECC, followed by the Global Economy Meeting and the final phase is the  All Governors' Meeting. This is how Adam Lebor describes holding a meeting of the Economic Consultative Committee, which he calls “the most exclusive club in the world”:

“The world’s most exclusive club has eighteen members. They gather every other month on a Sunday evening at 7 p.m. in conference room E in a circular tower block whose tinted windows overlook the central Basel railway station. 

Their discussion lasts for one hour, perhaps an hour and a half. Some of those present bring a colleague with them, but the aides rarely speak during this most confidential of conclaves. 

The meeting closes, the aides leave, and those remaining retire for dinner in the dining room on the eighteenth floor, rightly confident that the food and the wine will be superb. 

The meal, which continues until 11 p.m. or midnight, is where the real work is done. The protocol and hospitality, honed for more than eight decades, are faultless. Anything said at the dining table, it is understood, is not to be repeated elsewhere.

Few, if any, of those enjoying their haute cuisine and grand cru wines — some of the best Switzerland can offer — would be recognized by passers-by, but they include a good number of the most powerful people in the world. These men — they are almost all men — are central bankers.”

 First unofficial meeting of the BIS Board of Directors in Basel, April 1930

In his book, Adam Lebor cites the composition of the Economic Consultative Committee as of 2013: Ben Bernanke, the chairman of the US Federal Reserve; Sir Mervyn King, the governor of the Bank of England; Mario Draghi, of the European Central Bank; Zhou Xiaochuan of the Bank of China; and the central bank governors of Germany, France, Italy, Sweden, Canada, India, and Brazil. Jaime Caruana, a former governor of the Bank of Spain, the BIS’s general manager, joins them.

The BIS’s latest annual report also mentions the Economic Consultative Committee and states that it consists of 18 members. This is still the same G-10 (more precisely, a G-11 of central banks), to which were added the European Central Bank (ECB), and the central banks of China, India, Japan, Brazil, Mexico.

All members of the ECC "by a strange coincidence" are members of the board of directors of the BIS. In addition to the 18 mentioned ECC members, the Council includes three more people, including Jens Weidmann, who heads the BIS Board of Directors and is the chairman of the All Governors' Meeting. Weidmann is the President of the German Federal Bank and member of the ECB Board.

The Economic Consultative Committee is currently led by Mark Carney, a banker with extensive experience. This is a man from the Goldman Sachs bank. Carney worked for 13 years in the Bank's offices in London, new York, Toronto and Tokyo, dealing with sovereign risks, emerging markets debt capital markets and bank investments. In 2008-2013 he was head of the Bank of Canada and since 2013-Governor of the Bank of England (having replaced Mervyn King). In the BIS, Mark Carney is also the chairman of the Global Economy Meeting. So, at the moment, a Goldman Sachs man leads the G-10. And one more detail: Carney is a member of the G-30. By the way, some other members of the upgraded “dozens” take part in the G-30. For example, Mario Draghi, who is also a man of the Goldman Sachs Bank.

The limited size of the article does not allow us to reveal all the threads that connect the G-30 and G-10. As for the upgraded “dozens,” its activity today is focused on managing the Bank for International Settlements.

The BIS is now the world’s thirtieth-largest holder of gold reserves, with 119 metric tons—more than Qatar, Brazil, or Canada. Membership in the BIS remains a privilege rather than a right. The board of directors is responsible for admitting central banks judged to “make a substantial contribution to international monetary cooperation and to the Bank’s activities.” China, India, Russia, and Saudi Arabia joined only in 1996. The bank has opened offices in Mexico City and Hong Kong but remains very Eurocentric. Estonia, Latvia, Lithuania, Macedonia, Slovenia, and Slovakia (total population 16.2 million) have been admitted, while Pakistan (population 169 million) has not. Nor has Kazakhstan, which is a powerhouse of Central Asia. In Africa only Algeria and South Africa are members—Nigeria, which has the continent’s second-largest economy, has not been admitted. (The BIS’s defenders say that it demands high governance standards from new members and when the national banks of countries such as Nigeria and Pakistan reach those standards, they will be considered for membership.)

Considering the BIS’s pivotal role in the transnational economy, its low profile is remarkable. Back in 1930 a New York Times reporter noted that the culture of secrecy at the BIS was so strong that he was not permitted to look inside the boardroom, even after the directors had left. Little has changed. Journalists are not allowed inside the headquarters while the Global Economy Meeting is underway. BIS officials speak rarely on the record, and reluctantly, to members of the press. The strategy seems to work. The Occupy Wall Street movement, the anti-globalizers, the social network protesters have ignored the BIS. Centralbahnplatz 2, Basel, is quiet and tranquil. There are no demonstrators gathered outside the BIS’s headquarters, no protestors camped out in the nearby park, no lively reception committees for the world’s central bankers.

As the world’s economy lurches from crisis to crisis, financial institutions are scrutinized as never before. Legions of reporters, bloggers, and investigative journalists scour the banks’ every move. Yet somehow, apart from brief mentions on the financial pages, the BIS has largely managed to avoid critical scrutiny. Until now.

Author: USA Really