The Wall Street Journal’s Federal Reserve reporter Jon Hilsenrath has a fascinating piece in today’s paper looking at the secret meetings between the leaders of the world’s largest central banks, including Federal Reserve Chairman Ben Bernanke, ECB President Mario Draghi, and Bank of England Governor Mervyn King, among others.The group meets for dinner several times a year in Basel, Switzerland, Hilsenrath says, at the headquarters of the Bank for International Settlements:
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.
And Hilsenrath writes that the meetings are incredibly secretive:
Serious matters follow appetizers, wine and small talk, according to people familiar with the dinners. Mr. King typically asks his colleagues to talk about the outlook in their respective countries. Others ask follow-up questions. The gatherings yield no transcripts or minutes. No staff is allowed.
Perhaps the most interesting part of the dinners, though, is that they go way back – all the way to the 1970s, when Bernanke, Draghi, King, and Bank of Israel Governor Stanley Fischer were all at MIT.
At the time, Bernanke and Draghi were completing their PhDs in MIT’s economics department, and Stanley Fischer, a professor, was an adviser on both of their doctoral theses. In the early 1980s, Mervyn King shared an office with Bernanke while a visiting professor at MIT.
Bloomberg Businessweek put together a great infographic detailing all of the MIT connections.
Hilsenrath writes, “While at MIT, the central bankers dreamed up mathematical models and discussed their ideas in seminar rooms and at cheap food joints in a rundown Boston-area neighbourhood on the Charles River.”
Those days are long gone, but the meetings still persist over 30 years later, now more secretive than ever.