A favorite cooking ingredient is basil, but this isn’t the basil we’re talking about in today’s program is it? What’s the importance of b-a-s-a-l to economics and finance? N.C. State University economist Mike Walden responds.
“Excellent question, and I’ve had this as a question maybe one tenth of one percent of the people know anything about because this is a somewhat of a hidden secret. Basal is actually a small city in Switzerland.
“It’s up in the northern part of Switzerland near the French and German borders. And the importance is that it’s home to something called the Bank of International Settlements, or BIS. Now that bank was created after World War I, primarily to facilitate the payment of reparations from the defeated Germany to the allied countries, particularly Great Britain and France.
“But today it has morphed into something much bigger. Really, the way to think of the Bank of International Settlements is it’s a bank for central bankers, and by central bankers, I mean like our Federal Reserve or the European Central Bank and China’s central bank.
“This bank, the Bank of International Settlements, facilitates movements of monies and currencies and in some cases gold between all of those central banks. They also very importantly will do research on financial issues, and they have become very prominent since the financial collapse of 2008 and 2009 in looking at bank regulations and making recommendations for new forms of regulations, many of which our country has already adopted. So, really what goes on in that small northern Switzerland town of Basal can have profound implications across the world.”