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Caught up in the costly Napoleonic wars, Austria went into sovereign default in 1811. Five years on, the public authorities founded a national bank to be financed and run by private shareholders, the idea being that an independent bank would help rebuild trust in money.
During the 200 years that followed, the Nationalbank emerged from the treasury´s banker of choice into a central bank, and from a private stock corporation into a public institution. Yet the challenges facing today´s Nationalbank are a surprising echo of the past: How to provide stable money? How far must central bank independence go? How does monetary policy making work in a multinational monetary union? How to provide stable money?
This engaging book provides the first extensive overview of monetary history in Austria, from the Nationalbank´s predecessor, the Wiener Stadtbanco, to Austria´s integration into the euro area today.

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Table of contents

6 Introduction

12 A first try at monetary autonomy-the Wiener Stadtbanco (1706-1816)

13 Public banks in the 1600s and 1700s-innovative payment services and public debt management

15 A bankrupt sovereign in need of a public bank

23 Paper money and inflation

34 Fragile stability during the Nationalbank´s formative years (1816-1848)

35 A private stock corporation as a guardian of Austria´s currency

46 Note-issuing bank of an economically and politically heterogeneous empire

52 The tasks of the Nationalbank

64 Turning from the treasury´s banker to the banker´s bank (1848-1878)

65 1848-the revolution accelerates long-term change

70 The return to convertibility proves to be a moving target

81 Taking on a new role in the financial system

88 Monetary policy after 1866: from fiscal to monetary dominance against all odds

96 200 years of monetary policy in pictures

112 Two governments, one bank-the Austro-Hungarian monetary union (1878-1914)

114 A separate note-issuing bank for Hungary?

124 Return to a stable external value

131 Conducting business in a large empire

142 World War I and the collapse of monetary union (1914-1919)

143 War preparations and the initial weeks of conflict

144 State financing and central bank policy during the war

150 The end of the monarchy and the joint currency

152 Hyperinflation and a new currency (1919-1931)

153 Hyperinflation and stabilization

156 The League of Nations loan

161 Central bank policy under foreign control, 1923-1929

167 The schilling replaces the crown

174 The Creditanstalt crisis, the Great Depression and World War II (1931-1945)

176 The Creditanstalt crisis

183 Restructuring of banks

186 Stable exchange rate, stagnating economy

189 Liquidation of the OeNB, the reichsmark replaces the schilling

194 Schilling reinstatement and economic miracle (1945-1971)

195 The schilling returns

214 Dynamic catch-up process and stability risks
222 Austria´s hard currency policy (1971-1999)

223 The crisis of the Bretton Woods system

225 Exchange rate policy as an anti-inflation policy

234 Financial market liberalization, EU accession and preparations for the euro

242 A single European currency-the OeNB as a Eurosystem central bank (1999-2016)

244 Monetary policy may change, but the objective does not

254 The common monetary policy, 1999 to 2015

257 New instruments to ensure financial stability

268 Conclusion

274 Currencies

276 Notes

298 References

311 Sources

312 List of tables, charts and maps

312 Photo credits

313 Index

317 Acknowledgments

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Caught up in the costly Napoleonic wars, Austria went into sovereign default in 1811. Five years on, the public authorities founded a national bank to be financed and run by private shareholders, the idea being that an independent bank would help rebuild trust in money.
During the 200 years that followed, the Nationalbank emerged from the treasury´s banker of choice into a central bank, and from a private stock corporation into a public institution. Yet the challenges facing today´s Nationalbank are a surprising echo of the past: How to provide stable money? How far must central bank independence go? How does monetary policy making work in a multinational monetary union? How to provide stable money?

This engaging book provides the first extensive overview of monetary history in Austria, from the Nationalbank´s predecessor, the Wiener Stadtbanco, to Austria´s integration into the euro area today.

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