Jon Hilsenrath and Brian Blackstone in an article in today’s WSJ titled, “Inside the Risky Bets of Central Banks,” describe how the major central bankers of the world meet every two months on Sunday evenings to exchange views over a fine dinner on the 18th floor of the BIS’s cylindrical tower in Basel, Switzerland, overlooking the Rhine. The talks are secret. No transcripts or minutes are kept:
Over Sunday dinners in Basel, which often stretch to three hours, they now talk of pressing, real-world problems with authority. The meals are part of two-day meetings held six times a year at the BIS. Dinner guests include leaders of the Fed, ECB, Bank of England and Bank of Japan, as well as central bankers from India, China, Mexico, Brazil and a few other countries.
The article notes that several members of the “clique” of central bankers are macroeconomists who received their PhDs from MIT. They emerged from their studies “with a belief that government could help to smooth out economic downturns. Central banks play a particularly important role in this view, not only by setting interest rates but also by influencing public expectations through carefully worded statements.” Here is a brief background on the BIS from the article:
The role of the Bank for International Settlements has broadened since it was formed in 1930 to handle reparation payments imposed on Germany after World War I. In the 1970s, it became the center of discussions on bank capital rules. In the 1990s, it became the meeting place for central bankers to talk about the global economy.