Organization of Central Banks
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Policies
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Fiscal policy
Tax policy · Budgetary policy Revenue · Spending · Budget Deficit or Surplus · Deficit spending Debt (External · Internal) Finance ministry · Fiscal union |
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Monetary policy
Money supply · Interest rate Monetary base · Discount window Reserve requirements Bank reserves · Gold reserves Monetary authority · Monetary union |
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Trade policy
Tariff · Non-tariff barrier Balance of trade · Gains from trade Trade creation · Trade diversion Protectionism · Free trade Commerce ministry · Trade bloc |
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Revenue and Spending
Tax revenue · Non-tax revenue Mandatory spending Discretionary spending |
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Optimum
Balanced budget (fiscal) Price stability (monetary) Growth (trade and investment) |
| Reform Fiscal adjustment · Monetary reform |
As an organization of central banks, the BIS seeks to make monetary policy more predictable and transparent among its 58 member central banks. While monetary policy is determined by each sovereign nation, it is subject to central and private banking scrutiny and potentially to speculation that affects foreign exchange rates and especially the fate of export economies. Failures to keep monetary policy in line with reality and make monetary reforms in time, preferably as a simultaneous policy among all 58 member banks and also involving the International Monetary Fund, have historically led to losses in the billions as banks try to maintain a policy using open market methods that have proven to be based on unrealistic assumptions.
Central banks do not unilaterally "set" rates, rather they set goals and intervene using their massive financial resources and regulatory powers to achieve monetary targets they set. One reason to coordinate policy closely is to ensure that this does not become too expensive and that opportunities for private arbitrage exploiting shifts in policy or difference in policy, are rare and quickly removed.
Two aspects of monetary policy have proven to be particularly sensitive, and the BIS therefore has two specific goals: to regulate capital adequacy and make reserve requirements transparent.
Read more about this topic: Bank For International Settlements
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