Clemens Jobst

Caught up in the costly Napleonic 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.

This article provides an overview of the supply and demand for cash in Austria over the past 200 years. After looking at the government, mint and central bank as cash providers and tracing the composition of cash supply, the article presents several stylized facts about the long-run
evolution of cash demand. Results show a relatively stable currency-to-GDP ratio, which is remarkable, given the structural changes in the economy and advances in payment technologies over the past 200 years. Among possible explanations is that innovations have  significantly increased the use of close cash substitutes like deposits without, however, reducing the currency-to-GDP ratio. Second, factors like the increasing monetization of the economy during the 19th century might have compensated for the cash-saving impact of financial innovations.
Moreover, most of the demand for cash might not be susceptible to payment innovations as it
is driven by hoarding. Finally, large political disruptions i.e. times of elevated economic uncertainty,
and systemic banking crises exert strong and persistent effects on the use of cash.

In this study, we provide a discussion of the role the Austrian central bank played as a lender of last resort (LLR) during selected episodes of financial distress from the Nationalbank’s foundation in 1816 until the Creditanstalt crisis of 1931. Based on our evidence, we argue that
free lending as advocated by British economist Walter Bagehot was historically the exception rather than the rule in Austria, and that no clear evolution toward more “free lending” is observable over time. The panic of 1912, a particularly fascinating example of a “forgotten” crisis that has never been investigated in detail, serves as our benchmark because the Nationalbank’s crisis management during this specific episode comes very close to an effective case of free lending. Instances of credit rationing during other financial crises seem to have emerged as a consequence of public doubts about the value-storing capacity of banknotes and due to a lack of discountable or pledgeable assets resulting from the Nationalbank’s regulations and/or risk management framework. Our study echoes earlier literature in the field, underlining
the importance of the microeconomics of last resort lending, including the incentive structure of lending programs and the ex ante supervision of counterparties.

Money market structures shape monetary policy design, but the way central banks perform their operations also has an impact on the evolution of money markets. This is important, because microeconomic differences in the way the same macroeconomic policy is implemented may be non-neutral. In this paper, we take a panel approach in order to investigate both directions of causality. Thanks to three newly-collected datasets covering ten countries over two centuries, we ask (1) where, (2) how, and (3) with what results interaction between money markets and central banks has taken place. Our findings allow establishing a periodization singling out phases of convergence and divergence. They also suggest that exogenous factors – by changing both money market structures and monetary policy targets – may impact coevolution from both directions. This makes sensible theoretical treatment of the interaction between central bank policy and market structures a particularly complex endeavor. JEL Cla...

In the public and academic discussion on the payment system TARGET2, the high claims and liabilities of some euro area countries have mostly been associated with the financial crisis. The implicit assumption that TARGET2 balances would be close to zero without the financial crisis is both theoretically and empirically wrong, though. This study looks into the payment mechanisms that have caused the TARGET2 liabilities of the Oesterreichische Nationalbank (OeNB) to rise to a substantial level over the past ten years. The increase can be attributed to a structurally-induced inflow of banknotes to the OeNB, which is partly due to tourism but above all to the physical shipment of euro cash from countries outside monetary union into Austria. This central bank money, which comes to Austria as cash, leaves the country in cashless form, causing an equivalent increase in the OeNB’s TARGET2 liabilities. Structurally induced in- and outflows of central bank money (in cashless form or as banknot...

Since the outbreak of turbulence in the financial markets in August 2007, the implementation of monetary policy – typically a peripheral aspect for observers of monetary policy – has attracted increased attention. The heightened attention was accompanied by uncertainty about how to interpret the liquidity measures taken and what to make of the new instruments introduced. This contribution provides the

This paper provides a new methodology to map international monetary relations in the 19th century. We identify an index of international liquidity and, applying techniques borrowed from formal network analysis (in particular, blockmodelling) we produce a formal ranking of currencies according to their degree of international circulation. The resulting indices are powerful tools to study the logic of the emergence

This contribution has set out to sketch the origins of central bank institutions in the territory of present-day Slovakia. In doing so it has thrown light on the factors driving the gradual extension of lending by the OeNB not only in Slovakia but in the Habsburg Monarchy more generally. Most striking is are the central role of the government and the importance of political considerations in all decisions concerning lending outside Vienna. The government and its representatives in the Bank not only determined the operational framework in place but also had significant influence on individual loans. The creation of new borrowing facilities was most often driven by economic and political emergencies, notably the revolution of 1848 and the stock exchange crash of 1873. Over time, however, short-run measures initiated by the government tended to evolve into permanent facilities run by the Bank according to its own economic criteria. While political influence remained important after 188...