by Ellen Brown
April 17, 2013
Ellen Brown developed her
research skills as an attorney practicing civil litigation in Los
Angeles. In Web of Debt, her latest book, she turns those skills to
an analysis of the Federal Reserve and "the money trust." She shows
how this private cartel has usurped the power to create money from
the people themselves, and how we the people can get it back. Her
earlier books focused on the pharmaceutical cartel that gets its
power from "the money trust." Her eleven books include Forbidden
Medicine, Nature's Pharmacy (co-authored with Dr. Lynne Walker), and
The Key to Ultimate Health (co-authored with Dr. Richard Hansen).
Her websites are
This carefully research article
by Ellen Brown was first published in April 19, 2009.
It sheds light on the current crisis of
the World monetary system.
(GR ed. M. Ch.)
Do we really want the Bank for
International Settlements (BIS)
issuing our global currency?
In an April 7  article in The London Telegraph titled "The
G20 Moves the World a Step Closer to a Global Currency," Ambrose
"A single clause in Point 19 of the
communiqué issued by the G20 leaders amounts to revolution in the global
"'We have agreed to support a general SDR allocation which will inject
$250bn (£170bn) into the world economy and increase global liquidity,'
it said. SDRs are Special Drawing Rights, a synthetic paper currency
issued by the International Monetary Fund that has lain dormant for half
"In effect, the G20 leaders have activated the IMF's power to create
money and begin global 'quantitative easing'. In doing so, they are
putting a de facto world currency into play. It is outside the control
of any sovereign body. Conspiracy theorists will love it."
Indeed they will.
The article is subtitled,
"The world is a step closer to a global
currency, backed by a global central bank, running monetary policy for
Which naturally raises the question,
Who or what will serve as this global
central bank, cloaked with the power to issue the global currency and
police monetary policy for all humanity?
When the world's central bankers met in
Washington last September, they discussed what body might be in a position
to serve in that awesome and fearful role.
A former governor of the Bank of England stated:
"[T]he answer might already be staring us in
the face, in the form of the Bank for International Settlements (BIS)...
The IMF tends to couch its warnings about economic problems in very
diplomatic language, but the BIS is more independent and much better
placed to deal with this if it is given the power to do so." 1
And if the vision of a global currency outside
government control does not set off conspiracy theorists, putting
the BIS in charge of it surely will.
The BIS has been scandal-ridden ever since it
was branded with pro-Nazi leanings in the 1930s.
Founded in Basel, Switzerland, in 1930, the BIS
has been called,
"the most exclusive, secretive, and powerful
supranational club in the world."
Charles Higham wrote in his book
Trading with the Enemy that by the late 1930s, the BIS had assumed an
openly pro-Nazi bias, a theme that was expanded on in a BBC Timewatch film
titled "Banking with Hitler" broadcast in 1998.2
In 1944, the American government backed a
resolution at the Bretton-Woods Conference calling for the liquidation of
the BIS, following Czech accusations that it was laundering gold stolen by
the Nazis from occupied Europe; but the central bankers succeeded in quietly
snuffing out the American resolution.3
Modest beginnings, BIS
Office, Hotel Savoy-Univers, Basel
First Annual General Meeting, 1931
Tragedy and Hope - A History of the World in Our Time
(1966), Dr. Carroll Quigley revealed the key role played in global
finance by the BIS behind the scenes.
Dr. Quigley was Professor of History at
Georgetown University, where he was President Bill Clinton's mentor. He was
also an insider, groomed by the powerful clique he called "the international
His credibility is heightened by the fact that
he actually espoused their goals.
"I know of the operations of this network
because I have studied it for twenty years and was permitted for two
years, in the early 1960′s, to examine its papers and secret records.
I have no aversion to it or to most of its
aims and have, for much of my life, been close to it and to many of its
instruments... [I]n general my chief difference of opinion is that it
wishes to remain unknown, and I believe its role in history is
significant enough to be known."
Quigley wrote of this international banking
"[T]he powers of financial capitalism had
another far-reaching aim, nothing less than to create a world system of
financial control in private hands able to dominate the political system
of each country and the economy of the world as a whole.
This system was to be controlled in a
feudalist fashion by the central banks of the world acting in concert,
by secret agreements arrived at in frequent private meetings and
The apex of the system was to be the Bank
for International Settlements in Basel, Switzerland, a private bank
owned and controlled by the world's central banks which were
themselves private corporations."
The key to their success, said Quigley, was that
the international bankers would control and manipulate the money system of a
nation while letting it appear to be controlled by the government.
The statement echoed one made in the eighteenth
century by the patriarch of what would become the most powerful banking
dynasty in the world.
Mayer Amschel Bauer Rothschild famously
said in 1791:
"Allow me to issue and control a nation's
currency, and I care not who makes its laws."
Mayer's five sons were sent to the major
capitals of Europe - London, Paris, Vienna, Berlin and Naples - with the
mission of establishing a banking system that would be outside government
The economic and political systems of nations
would be controlled not by citizens but by bankers, for the benefit of
Eventually, a privately-owned "central bank" was
established in nearly every country; and this central banking system has now
gained control over the economies of the world.
Central banks have the authority to print money
in their respective countries, and it is from these banks that governments
must borrow money to pay their debts and fund their operations.
The result is a global economy in which not only
industry but government itself runs on "credit" (or debt) created by a
banking monopoly headed by a network of private central banks; and at the
top of this network is the BIS, the "central
bank of central banks" in Basel.
Behind the Curtain
For many years the BIS kept a very low profile, operating behind the scenes
in an abandoned hotel.
It was here that decisions were reached to,
devalue or defend currencies
fix the price of gold
regulate offshore banking
raise or lower short-term interest rates
In 1977, however, the BIS gave up its anonymity
in exchange for more efficient headquarters.
The new building has been described as,
"an eighteen story-high circular skyscraper
that rises above the medieval city like some misplaced nuclear reactor."
It quickly became known as the "Tower of Basel."
Today the BIS has governmental immunity, pays no
taxes, and has its own private police force.4
It is, as Mayer
envisioned, 'above the law'. The BIS
is now composed of 55 member nations, but the club that meets regularly in
Basel is a much smaller group; and even within it, there is a hierarchy.
In a 1983 article in Harper's Magazine called "Ruling
the World of Money," Edward Jay Epstein wrote that where
the real business gets done is in,
"a sort of inner club made up of the half
dozen or so powerful central bankers who find themselves more or less in
the same monetary boat",
the United States
"The prime value, which also seems to
demarcate the inner club from the rest of the BIS members, is the firm
belief that central banks should act independently of their home
A second and closely related belief of the
inner club is that politicians should not be trusted to decide the fate
of the international monetary system."
In 1974, the Basel Committee on Banking
Supervision was created by the central bank Governors of the Group of
Ten nations (now expanded to twenty).
The BIS provides the twelve-member Secretariat
for the Committee. The Committee, in turn, sets the rules for banking
globally, including capital requirements and reserve controls.
In a 2003 article titled "The
Bank for International Settlements Calls for Global Currency,"
Joan Veon wrote:
"The BIS is where all of the world's central
banks meet to analyze the global economy and determine what course of
action they will take next to put more money in their pockets, since
they control the amount of money in circulation and how much interest
they are going to charge governments and banks for borrowing from
"When you understand that the BIS pulls the strings of the world's
monetary system, you then understand that they have the ability to
create a financial boom or bust in a country.
If that country is not doing what the money
lenders want, then all they have to do is sell its currency." 5
The power of the BIS to make or break economies was demonstrated in 1988,
when it issued a
Basel Accord raising bank capital
requirements from 6% to 8%.
By then, Japan had emerged as the world's
largest creditor; but Japan's banks were less well capitalized than other
major international banks. Raising the capital requirement forced them to
cut back on lending, creating a recession in Japan like that suffered in the
Property prices fell and loans went into default
as the security for them shriveled up. A downward spiral followed, ending
with the total bankruptcy of the banks. The banks had to be nationalized,
although that word was not used in order to avoid criticism.6
Among other collateral damage produced by the Basel Accords was a spate of
suicides among Indian farmers unable to get loans.
The BIS capital adequacy standards required
loans to private borrowers to be "risk-weighted," with the degree of risk
determined by private rating agencies; and farmers and small business owners
could not afford the agencies' fees.
Banks therefore assigned 100 percent risk to the
loans, and then resisted extending credit to these "high-risk" borrowers
because more capital was required to cover the loans.
When the conscience of the nation was aroused by
the Indian suicides, the government, lamenting the neglect of farmers by
commercial banks, established a policy of ending the "financial exclusion"
of the weak; but this step had little real effect on lending practices, due
largely to the strictures imposed by the BIS from abroad.7
have come from Korea.
An article in the December 12, 2008 Korea Times
Calls Trigger Vicious Cycle" described how Korean entrepreneurs
with good collateral cannot get operational loans from Korean banks, at a
time when the economic downturn requires increased investment and easier
"'The Bank of Korea has provided more than
35 trillion won to banks since September when the global financial
crisis went full throttle,' said a Seoul analyst, who declined to be
named. 'But the effect is not seen at all with the banks keeping the
liquidity in their safes. They simply don't lend and one of the biggest
reasons is to keep the BIS ratio high enough to survive,' he said...
"Chang Ha-joon, an economics professor at Cambridge University, concurs
with the analyst. 'What banks do for their own interests, or to improve
the BIS ratio, is against the interests of the whole society. This is a
bad idea,' Chang said in a recent telephone interview with Korea Times."
In a May 2002 article in The Asia Times titled "Global
Economy - The BIS vs. National Banks," economist Henry C.K.
Liu observed that the Basel Accords have forced national banking
"to march to the same tune, designed to
serve the needs of highly sophisticated global financial markets,
regardless of the developmental needs of their national economies."
"[N]ational banking systems are suddenly
thrown into the rigid arms of the Basel Capital Accord sponsored by the
Bank of International Settlement (BIS), or to face the penalty of
usurious risk premium in securing international interbank loans...
National policies suddenly are subjected to
profit incentives of private financial institutions, all members of a
hierarchical system controlled and directed from the money center banks
in New York. The result is to force national banking systems to
"BIS regulations serve only the single purpose of strengthening the
international private banking system, even at the peril of national
The IMF and the international banks
regulated by the BIS are a team: the international banks lend recklessly
to borrowers in emerging economies to create a foreign currency debt
crisis, the IMF arrives as a carrier of monetary virus in the name of
sound monetary policy, then the international banks come as vulture
investors in the name of financial rescue to acquire national banks
deemed capital inadequate and insolvent by the BIS."
Ironically, noted Liu, developing countries with
their own natural resources did not actually need the foreign investment
that trapped them in debt to outsiders:
"Applying the State Theory of Money [which
assumes that a sovereign nation has the power to issue its own money],
any government can fund with its own currency all its domestic
developmental needs to maintain full employment without inflation."
When governments fall into the trap
of accepting loans in foreign currencies, however, they become "debtor
nations" subject to
IMF and BIS regulation. They are forced to
divert their production to exports, just to earn the foreign currency
necessary to pay the interest on their loans.
National banks deemed "capital inadequate" have
to deal with strictures comparable to the "conditionalities" imposed by the
IMF on debtor nations:
"escalating capital requirement, loan
writeoffs and liquidation, and restructuring through selloffs, layoffs,
downsizing, cost-cutting and freeze on capital spending."
"Reversing the logic that a sound banking
system should lead to full employment and developmental growth, BIS
regulations demand high unemployment and developmental degradation in
national economies as the fair price for a sound global private banking
The Last Domino to
While banks in developing nations were being penalized for falling short of
the BIS capital requirements, large international banks managed to escape
the rules, although they actually carried enormous risk because of their
The mega-banks succeeded in avoiding the Basel
rules by separating the "risk" of default out from the loans and selling it
off to investors, using a form of derivative known as "credit
However, it was not in the game plan that U.S. banks should escape the BIS
When they managed to sidestep the first Basel
Accord, a second set of rules was imposed known as
Basel II. The new rules were established in
2004, but they were not levied on U.S. banks until November 2007, the month
after the Dow passed 14,000 to reach its all-time high. It has been all
downhill from there.
Basel II had the same effect on U.S. banks that
Basel I had on Japanese banks: they have been struggling ever since to
Basel II requires banks to adjust the value of their marketable securities
to the "market price" of the security, a rule called "mark
to market." 9 The rule has theoretical merit, but the
problem is timing: it was imposed ex-post facto, after the banks already had
the hard-to-market assets on their books.
Lenders that had been considered sufficiently
well capitalized to make new loans suddenly found they were insolvent. At
least, they would have been insolvent if they had tried to sell their
assets, an assumption required by the new rule.
Financial analyst John Berlau complained:
"The crisis is often called a 'market
failure,' and the term 'mark-to-market' seems to reinforce that. But the
mark-to-market rules are profoundly anti-market and hinder the
free-market function of price discovery...
In this case, the accounting rules fail to
allow the market players to hold on to an asset if they don't like what
the market is currently fetching, an important market action that
affects price discovery in areas from agriculture to antiques."
Imposing the mark-to-market rule on U.S. banks
caused an instant credit freeze, which proceeded to take down the economies
not only of the U.S. but of countries worldwide.
In early April 2009, the mark-to-market rule was
finally softened by the U.S. Financial Accounting Standards Board
(FASB); but critics said the modification did not go far enough, and it was
done in response to pressure from politicians and bankers, not out of any
fundamental change of heart or policies by the BIS.
And that is where the conspiracy theorists come in.
Why did the BIS not retract or at least
modify Basel II after seeing the devastation it had caused?
Why did it sit idly by as the global
economy came crashing down?
Was the goal to create so much economic
havoc that the world would rush with relief into the waiting arms of
the BIS with its privately-created global currency?
The plot thickens...
1. Andrew Marshall, "The
Financial New World Order: Towards a Global Currency and World
Government," (April 6, 2009)
2. Alfred Mendez, "The
Network," The World Central Bank: The Bank for International Settlements
- Bank of International Settlement: The Mother of All Central Banks,"
5. Joan Veon, "The
Bank for International Settlements Calls for Global Currency,"
(August 26, 2003)
6. Peter Myers, "The
1988 Basle Accord - Destroyer of Japan's Finance System,"
(updated September 9, 2008)
7. Nirmal Chandra, "Is
Inclusive Growth Feasible in Neoliberal India?",
8. Bruce Wiseman, "The
Financial Crisis: A look Behind the Wizard's Curtain," (March
9. See Ellen Brown, "Credit
Where Credit Is Due," (January 11, 2009)
10. John Berlau, "The
International Mark-to-market Contagion," (October 10, 2008)