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Central banking in nineteenth-century Belgium: was the NBB a lender of last resort?

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  • Buyst, Erik
  • Maes, Ivo

Abstract

The creation of the National Bank of Belgium (NBB) in 1850 marked a fundamental reform of the Belgian financial system. It clearly aimed at rendering the financial system more crisis resistant, especially by restricting the leverage of the banking sector. The NBB, which received the privilege to issue banknotes, was subject to strict rules to grant only short-term credit against collateral. The NBB took up a key role in maintaining monetary stability, especially by safeguarding the convertibility of banknotes. The NBB also took part in certain rescue operations of financial institutions. However, this was mostly on explicit demand from the finance minister and for crises concerning discount banks. It would then be an exaggeration to consider it as a lender of last resort, in the sense of taking responsibility for the stability of the financial system. This should be no surprise, given the limitations imposed by its statutes, especially the limitation to short-term credits and the strict rules on collateral, the role of the profit motive in its commercial activities and the priority for safeguarding the convertibility of banknotes.

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  • Buyst, Erik & Maes, Ivo, 2008. "Central banking in nineteenth-century Belgium: was the NBB a lender of last resort?," Financial History Review, Cambridge University Press, vol. 15(2), pages 153-173, October.
    • Handle: RePEc:cup:fihrev:v:15:y:2008:i:02:p:153-173_00
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    Cited by:

    1. Nicolas Devijlder & Koen Schoors, 2020. "Land rights, local financial development and industrial activity: evidence from Flanders (nineteenth–early twentieth century)," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 14(3), pages 507-550, September.
    2. Singleton,John, 2010. "Central Banking in the Twentieth Century," Cambridge Books, Cambridge University Press, number 9780521899093, January.
    3. Jamilov, Rustam & König, Tobias & Müller, Karsten & Saidi, Farzad, 2024. "Two Centuries of Systemic Bank Runs," CEPR Discussion Papers 19382, C.E.P.R. Discussion Papers.
    4. Stefano Ugolini, 2011. "What do we really know about the long-term evolution of central banking? Evidence from the past, insights for the present," Working Paper 2011/15, Norges Bank.
    5. Nicolas De Vijlder & Koen Schoors, 2019. "Land Rights, Local Financial Development And Industrial Activity: Evidence From Flanders (19th – Early 20th Century)," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 19/962, Ghent University, Faculty of Economics and Business Administration.
    6. Erik Buyst & Ivo Maes, 2008. "The Regulation and Supervision of the Belgian Financial System (1830 - 2005)," Working Papers 77, Bank of Greece.
    7. Clemens Jobst & Kilian Rieder, 2016. "Principles, circumstances and constraints: the Nationalbank as lender of last resort from 1816 to 1931," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 140-162.
    8. Annaert, Jan & Mensah, Lord, 2014. "Cross-sectional predictability of stock returns, evidence from the 19th century Brussels Stock Exchange (1873–1914)," Explorations in Economic History, Elsevier, vol. 52(C), pages 22-43.
    9. Masato Shizume, 2017. "A History of the Bank of Japan, 1882-2016," Working Papers 1719, Waseda University, Faculty of Political Science and Economics.

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