Too big to be seen

Every other month, 18 of the most powerful financial figures in the world - central bankers of the US, the UK, China, Germany, the European Central Bank and 13 other entities - gather "in a circular tower block whose mirrored windows overlook the central Basel railway station" in Switzerland. After an hour or so of discussions, they adjourn for a private gourmet dinner on the top floor of the tower, in a dining room designed by the same architectural firm that built the much-lauded "Bird's Nest" stadium for the 2008 Beijing Olympics, with "white walls, a black ceiling and spectacular views over three countries: Switzerland, France and Germany". These bankers constitute the elite of the elite, the highest tier of governors of the Bank for International Settlements (BIS). Ostensibly, the main function of this little-known, 83-year-old behemoth is to facilitate boring back-room operations like interbank transfers for the global financial community. In fact, the BIS is so powerful that it helped prop up Nazi Germany, create the euro and bring down the Soviet Union. Like a sovereign nation, it is exempt from Swiss taxes, and "the Swiss authorities have no jurisdiction over the BIS premises". At this point, the reader is eagerly flipping the pages of the new book The Tower of Basel: The Shadowy History of the Secret Bank That Runs the World, searching for more inside scoops on those dinners and bankers. Clearly, this is an institution that anyone who is engaged in multinational business needs to understand. Unfortunately, the reader will be disappointed. Approximately three-quarters of Tower of Basel focuses on the BIS during the 1930s and 1940s - how it first ignored the horrors of the Nazis, then helped them plunder the nations they conquered, and finally whitewashed the sordid pasts of the surviving German leaders after the Second World War. And while that, too, is an important story that ought to be told, it actually has been written about already - including in another book, Hitler's Secret Bankers, by this same author, the Hungarian-based journalist Adam LeBor. Meanwhile, the real "inside story" of the modern BIS remains unwritten and sorely needed. In its last few chapters, Tower of Basel finally flicks at some of the key challenges facing the BIS today, including the question of whether it still has a reason to exist, in a world with plenty of other multilateral financial institutions such as the International Monetary Fund and the European Central Bank. Plus, there are a few more details about the BIS tower's security cameras and the bankers' private country club. "The BIS has survived through the decades just as it was born - by opacity, secrecy and by hiding behind a carapace of legal immunities," LeBor writes. "These protections perpetuate the technocrats' belief that a tiny, self-selecting elite, unaccountable to everyday citizens, should manage global finance." Indeed, the BIS was created almost single-handedly in 1930 by Montagu Norman, the notoriously mercurial governor of the Bank of England, primarily as a mechanism for implementing the harsh programme of German reparations after the First World War. Norman worked with a small and close-knit network of fellow aristocrats, industrialists and financiers, especially Allan Dulles (a future director of the US Central Intelligence Agency) and Hjalmar Schacht, later to be head of the Reichsbank under Adolph Hitler and a dear friend of Norman's for nearly three decades. "Away from the demands of politicians and the prying eyes of nosy journalists, the bankers would bring some much needed order and coordination to the world financial system," according to this book.