Tower of Basel. — Book Review
“The shadow history of the secret bank that runs the world”
Author: Adam Lebor, Pages: 314; Publication Date: Mayo 28, 2013
In summary:
A recommended book, which sheds some light on the BIS, Bank of International Settlements; one of the most opaque, unknown institutions whose operations are kept as secret as possible, but whose influence on banking policy, monetary and financial is immense. As a button shows: the Basel I, II, and III Accords that are being implemented and that regulate all financial and monetary operations of all types of banks worldwide, were designed by the BIS
In detail:
The author’s intention is for the book to be an exposé on the BIS and its immense influence on the design of the present and future banking, monetary and financial policy at a global level; but in the end, it only manages to be a book that deals with the origin and history to date of the BIS, which is the Bank of the Central Banks of the great powers (the G10 and other invited Central Banks).
From the historical point of view, the book is sincerely fascinating, from the origin of the bank and throughout the WWII period, the text of the book develops as a historical spy novel of WWII, mentioning with first and last names, historical characters both the CIA and MI5, whom he portrays in small biographies as well as the different Directors and Chairmen of the BIS and their interactions during the War years
From the author’s point of view, the BIS is an amoral and spurious institution since during WWII it collaborated with Nazism and allowed the 3rd Reicht access to capital markets, to finance its war machine with all the associated atrocities, as well as a safe place to deposit and safeguard all the gold and cash that was seized during the Nazi occupation during WWII. However, the author also points out that the BIS was one of the first institutions that anticipated the fall of Hitler with years of advantage, from that point it became an agent and collaborator of the allied powers and was one of the financial pillars in the recovery of post-war Europe
The author also criticizes and points out the contradiction that the BIS, to date, has as partners the Central Banks of the G10 economies and whose capital is of public origin (the deposits of the Central Banks) and that its officials are public servants (they are the Governors and General Managers of the Central Banks of the member countries) and that nevertheless neither the president of the board, nor any of the members of the senior management of the BIS have any obligation to render accounts to any of their governments’ members, nor does the BIS have to report any of its transactions to any of the member governments, be it the president or their parliaments, and that their assets are protected by international agreements, which ensures that they will never suffer seizure by the system of justice of any of its member states
From the above, the author’s view is that the fundamental problem of the BIS is a political institution that hides as a “technical body” to avoid the political control to which it must be subject given its influence and the assets it manages.
The author strongly criticizes the fact that an institution led by a group of technocrats has so much influence over the financial destiny of so many democracies and that its decisions are not subject to any criticism, control, or accountability nor are they subject to any political or judicial control of democracies that are affected by its decisions and raises, in a weak and superficial way, some actions that the BIS and the member democracies of the BIS should take to provide greater transparency and accountability.
On a personal level, I must point out that the author’s criticism on the topics of transparency and accountability of the BIS with respect to member governments comes from a well-intentioned sense of balance of powers in developed democracies and only that; since he does not provide any example showing that the decisions and recommendations of the BIS have produced monetary, fiscal or banking crises, except perhaps the strict zeal for austerity policies in the Eurozone but absolutely nothing else. The author even points out that the financial crisis of 2008 was announced by the BIS in advance, as well as the monetary crisis in Asia in the 90s, and that its recommendations were ignored; this reinforces the idea that these unelected technocrats who do not answer to anyone know what they are talking about, above politicians and members of parliament who, either by action or omission, let those crises to rage on unchecked until was too late.
Being a citizen of Ecuador and having experienced personally and several times in my lifetime, what happens when a government, has total control over the Central Bank and over the banking, monetary and financial policy, without any counterweight from any political or technical institution; I would prefer an opaque institution that is right, to a politician that is transparent but leads us to disaster… South America has a long history of politicians in control of public finances and ignored technocrats, and it is a history of great poverty, misery, and political instability
In the end, a highly recommended book; do not expect to find a master class in international finance or monetary policy, that is not the author’s intent. It is a historical and semi-biographical book from which each reader will draw their own conclusions about whether the BIS should exist or not.
