Are international organizations like the Bank for International Settlements unable to die?

Abstract

BIS, Public choice, International organizations, F53, D73, O19,

What Kills International Organizations? When and Why International Organizations Die

“…IGOs offering centralized information-provision, decision-making and implementation thus provide general assets which increase the efficiency of transactions in a variety of cooperative contexts. A large literature also finds that centralization enhances IGOs' capacity for autonomous action which in turn increases organizational capacity to make timely strategic decisions to accommodate environmental change (Haftel and Thompson 2006:260;Bernholz 2009;Lall 2017;Abbott et al 2016).…”

“…Created during a period of global financial turmoil, dealing with a highly politicized issue (war reparations), and having a small membership of mainly European states most of whom would fight on opposite sides as war broke out within a decade of BIS' founding, the Bank would seem highly vulnerable to termination. Its survival is the more surprising since BIS came under direct attack by the most world's powerful country, the US, which demanded its dissolution (Bernholz 2009). Despite these unpromising beginnings, the BIS survived multiple crises and remains operational to this day.…”

“…The first challenge to BIS' existence resulted from the breakdown of the Gold Standard, and the termination of German reparation payments (Lausanne Agreement, July 1932)-both consequences of the Great Depression. These events made BIS' main task of facilitating WWI reparation payments obsolete and caused a 50% reduction in net profits between 1932-1939(Bernholz 2009. Robbed of its chief purpose, the BIS instead focused on its second statutory task; fostering cooperation between central banks.…”

“…As political tensions deepened in Europe, the BIS was instrumental in helping continental European central banks transfer part of their monetary reserves overseas-to London and New York. Its early survival was thus ensured by the range of its tasks (Bernholz 2009). Indeed, "had it not been for Article 3…BIS would have disintegrated in 1932 when the Lausanne Agreement brought war reparations to an end."…”

“…This bias, I submit, has led scholars to widely overestimate institutional robustness and to overlook processes that lead to institutional termination. On the flipside, the comparatively sparse literature on institutional collapse has tended to focus on individual cases (Bernholz 2009), or has centred on select segments of the population (Cotrell 2016;Panke and Peterson 2011;Shanks et al 1996;Gray 2018 5 ). Limited by functional specificities and historical contingency, such studies fail to offer a general explanation of institutional death that can account for mortality patterns across a wider universe of cases.…”