Maybe you don't follow the coming-and-goings of Ben Bernanke as closely as we do, but if you catch wind someday that the Federal Reserve chairman is off to Switzerland, it's a safe bet he's headed for a non-descript office tower in Basel and a meeting of the Bank for International Settlements.
Even though the men in that meeting — and they are almost always men — basically control the plumbing of the global economy, you're not going to see any of them holding press conferences or background briefings. In fact, when central bankers like Bernanke and the Bank of England's Mervyn King gather there, no journalists are even allowed in the building, nor does the bank release notes about what's going on.
"The Bank for International Settlements is essentially the most important bank you've never heard of," said Adam LeBor, author of "The Tower of Basel: The Shadowy History of the Secret Bank that Runs the World."
Founded in 1930 to handle German reparations payments after World War I, the bank kept operating into WWII, LeBor noted. Money was changing hands between Allied Forces and Axis powers at war, even as troops bitterly fought one another. Looted Nazi gold was accepted among the bank's assets. A number of BIS officials were later tried for war crimes. It was a safe place for bankers to meet in secret, in politically neutral Switzerland.
These days, the BIS remains a secure meeting location for central bankers worldwide, with a signifcant role in the regulation of the global economy. Worldwide banking capital requirements, sometimes referred to as Basel III refer to the bank's location, where the agreement was brokered.
"The BIS is the bank for central banks," LeBor says. "It offers banking services, especially if you're a central banker from a smaller country, I don't know, Hungary or Algeria or somewhere. You need some expertise, you need help, you need some rapid loan facilities."
In other words, the BIS is an alternative to the reform packages and loans the International Monetary Fund provides small countries. Members with larger shares, like the United States and France, benefit from the dividends.
"It's a commercial bank," LeBor said. "All its profits are tax free. Last year it made profits of $1.17 billion."
While LeBor is also a novelist, this book is a work of nonfiction. He acknowledged that his research on the BIS might sound like the concerns of a conspiracy theorist, the bank wields significant power, without much in the way of oversight.
"The Swiss authorities have no jurisdiction over its property," he said. "It has the protections of the United Nations essentially, or a diplomatic embassy."
There's some logic to all that secrecy. LeBor interviewed a number of current and former central bankers, and agreed there's risk in previewing monetary policy that has not yet been implemented.
"If you're a central bank, and you're going to intervene in a the market and you say, 'We think the dollar's weak, we're going to do this,' and that information comes out, that's extremely valuable for people buying and selling, you know, shorting the currency."
But that's no excuse for the extremely tight grip on everything from attendees, to schedule, even the official membership of the bank, Lebor said. "The current setup is a hangover from the 1930s of a different age of deference to authority... of technocrats saying we know what's best for you little people."
"The world doesn't work like that anymore — well it does in this setup — but it's got to change."