Home/host relationships, 1975

As already noted in Chapter 2, the main focus of the G10 governors’ communiqué, establishing the Basel Committee on Banking Supervision (BCBS), was on external financial issues, notably on ‘the need for an early warning system’ for potential future international financial crises. Nevertheless, besides a survey, a summary paper, produced by the BIS on ‘existing regulations and supervisory practices’ in the member countries, the agenda for the first meeting (BS/75/1) had as item V a discussion of ‘Future Work’ (also see Chapter 3). The four topics that were then (6–7 February 1975) (BS/75/5) selected for such further consideration, with further work to be commissioned on them, were:

1. relation of banks with foreign exchange brokers (see Chapter 5);

2. responsibility for supervision of banks’ overseas branches, subsidiaries and joint ventures;

3. techniques of support and rescue operations (see Chapter 11); and

4. definition of capital and its role (see Chapter 6).

The question of what should be the relative responsibilities of home/host supervisors had been a key concern that had led to the initiative for the foundation of the Groupe de Contact (see Chapter 2). So it was no surprise that Huib Muller of the Nederlandsche Bank, one of the founding fathers of the Groupe, and initially appointed to the BCBS, volunteered to produce a paper on this topic. Indeed, he must already have had such a paper ready for this purpose, since the first draft was available and circulated by the BIS on 17 March 1975 (BS/75/11).