BIS home Banking services Bank for central banks Banking services for central banks
The BIS offers a wide range of financial services specifically designed to
assist central banks and other official monetary institutions in the management
of their foreign exchange reserves. Some 140 customers, including various
international financial institutions, currently make use of these services.
On average, over the last few years, some 6% of global foreign exchange reserves
have been invested by central banks with the BIS and as of 31 March 2006, total
currency deposits amounted to SDR 186 billion. BIS financial services are
provided out of two linked trading rooms: one at its Basel head office and one
at its office in Hong Kong SAR.
The Bank continually adapts its product range
in order to respond more effectively to the evolving needs of central banks.
Besides standard services such as sight/notice accounts and fixed-term
deposits, the Bank has developed a range of more sophisticated financial
products which central banks can actively trade with the BIS to increase the
return on their foreign assets. The Bank also transacts foreign exchange and
gold on behalf of its customers.
In addition, the BIS offers a range of asset management services in sovereign
securities or high-grade assets. These may be either a specific portfolio
mandate negotiated between the BIS and a central bank or an open-end fund
structure the BIS Investment Pool (BISIP) allowing customers to
invest in a common pool of assets. The two Asian Bond Funds (ABF1 and ABF2) are
administered by the BIS under the BISIP umbrella: ABF1 is managed by the BIS
and ABF2 by a group of external fund managers.
The BIS extends short-term credits to central banks, usually on a collateralised
basis. From time to time, the BIS also coordinates emergency short-term lending
to countries in financial crisis. In these circumstances, the BIS advances
funds on behalf of, and with the backing and guarantee of, a group of
supporting central banks.
The Bank's Statutes do not allow the Bank to open
current accounts in the name of, or make advances to, governments. The BIS does
not accept deposits from, or generally provide financial services to, private
individuals or corporate entities.
Risk control
Safety and liquidity are the key features of the Bank's credit intermediation
services, which are supported by a strong internal risk management framework.
Risks arising from the BIS's various banking activities are rigorously
monitored by a risk control unit, independent from the BIS's Banking
Department, reporting directly to the Deputy General Manager and, through him,
to the General Manager.
The Internal Audit function, which has the same internal reporting lines as Risk
Control, focuses much of its attention on monitoring the soundness of the BIS's
banking operations. Its findings are reported on a regular basis to the Audit
Committee established by the BIS's Board. The Internal
Audit charter describes the mission, independence and objectivity,
scope and responsibilities, authority, accountability and standards of the
function.
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