Bank for International Settlements (BIS)

The Bank for International Settlements was set up in 1930 in Basel, Switzerland, initially to help with German reparations. However, the BIS swiftly became a non-political central bank for central bankers and has since developed into what it terms “a forum for international monetary and financial cooperation”.

As a pillar of the monetary infrastructure of the western world, it has been widely used by central banks to buy and sell gold discreetly on their behalf or to act as intermediary in the transfer of gold between themselves and it has acted as the agent for the Austrian and Netherlands central banks in their gold sales in recent years.

Central banks can also swap gold with the BIS against foreign exchange; it also pays interest on time deposits of gold and leases central banks’ time deposits into the market.

As of end-March 2001 the BIS had received deposits totalling 1,022 tonnes (33 million oz) of gold from central banks and other institutions; a sizeable proportion of this bullion was being lent on to the market. The BIS’s own gold holdings are 192 tonnes (6.2 million oz), much of which is on deposit in the leasing market (this gold also forms part of the BIS’s capital and reserve funds).

Uniquely, the BIS still presents its accounts in gold francs. One gold franc is defined as 0.290322 grams (0.009 oz), but since 1979 the BIS has valued 1 gold franc at US$1.941 – a fixed gold price of $208 per ounce.