September 1918
Legislative efforts to establish a bank of issue
Although the National Bank of Czechoslovakia was not established until almost eight years after the establishment of Czechoslovakia and seven years after the introduction of the Czechoslovak currency, discussions about its establishment date back to the time of the Austro-Hungarian monarchy. In September 1918, Jaroslav Preiss, Managing Director of Živnostenská Banka, summarised the ideas of Czech economists and politicians, including Alois Rašín, in a draft text known as the Economic Act.
Two versions of this draft have survived to the present day in the Czech National Bank. In the earlier version, the future issuing institution is addressed in one article (Article 6) titled “The bank of issue”, while the second (newer) version, mentions the bank of issue in three articles (Articles 9–11). Both versions envisaged that, upon the enactment of the law, all issuance privileges of the Austro-Hungarian Bank and its branches in the new state would be immediately revoked. At the same time, it was assumed that from that moment, all branches of the bank would be prohibited from engaging in any activities aimed at transferring assets abroad, i.e. to the headquarters of the bank of issue in Vienna or Budapest. The management of the bank’s branches was to be entrusted to commissioners reporting solely to the finance minister.
The Austro-Hungarian Bank was to be replaced as quickly as possible by the “Bank of the Czech Lands”, established by the Ministry of Finance. It was to hold the privilege of bank of issue – the right to issue banknotes.
The Economic Act provided only a very brief outline of the structure and functioning of the new bank. It only assumed that, like the existing Austro-Hungarian Bank, it would take the form of a joint-stock company, whose share capital would be raised through subscription. The newer version also mentioned the post of the bank’s governor appointed by the minister of finance, but without specifying his powers.
Ultimately, the Economic Act was never enacted due to the rapid political developments in October 1918. Incidentally, the same fate befell the Political Act, which outlined the future Constitution. However, the ideas formulated in these two documents served as inspiration for many political and economic measures adopted shortly after the establishment of Czechoslovakia.