##nt policy. as it turned out, being an independently run, supranational institution, the bank was well placed to take decisions swiftly, when the political process was fraught with difficulties. here, all of you probably see some similarity to the role of the eurosystem during the recent crisis. quite often the eurosystem had to take the lead, e. g. with the smp or omt, until the governments managed to agree on long - run arrangements like the esm or banking union. that war is the greatest threat to financial and monetary stability became again painfully clear when the first world war broke out in 1914. the four years of war proved catastrophic, for the population, which suffered death and hunger, for the monarchy, which fell apart after centuries of existence, and for the currency, which by november 1918 had lost 95 % of its pre - war value. but worse was to come. the new republic of austria, found itself in a bis central bankers ’ speeches horrendously difficult position. in the post - war chaos, austria was cut off from the supply of food and coal and its traditional markets. the only way to finance the burgeoning government expenses was to print money. it is therefore not surprising that those parts of the monarchy, like czechoslovakia, that found themselves in a better economic and political condition created their own currencies. czechoslovakia, i. e. today ’ s czech republic, by the way, is the only part of the former empire that to this day uses the name “ crown ” for its currency, the name introduced by the austro - hungarian central bank in 1892. by 1919, the monetary area governed by the austro - hungarian bank for more than hundred years did no longer exist. in the meantime, austria faced the worst inflation in its history that could only be stopped when the newly founded league of nations arranged a loan for austria in 1922. the league loan, which was the first international support scheme of its kind, came with severe conditions attached. for several years, austrian fiscal policy was under direct supervision of league commissioners. in 1923, the oesterreichische nationalbank was resurrected from the ashes of the defunct austro - hungarian bank. here again, a representative of the league sat on the board. the stabilization succeeded and the republican schilling replaced the crown of the old monarchy. the new bank, however, soon had to face a banking system that was weakened by hyperinflation and the need to

ewald nowotny : “ central bank policies – past challenges and future perspectives ” – session 1 speech by prof dr ewald nowotny, governor of the central bank of the republic of austria, at the ceremony to mark the 200th anniversary of the central bank of the republic of austria, vienna, 2 june 2016. * * * mr. president of the republic heinz fischer, prime minister christian kern, dear president mario draghi, ladies and gentlemen, it ’ s a great pleasure for me to welcome you today to the commemoration of the 200th anniversary of the oesterreichische nationalbank and we are very grateful and proud that such an eminent audience has followed our invitation to this celebratory event. in the two hundred years of its existence, the fate of the nationalbank has always been closely entwined with the fate of austria, for better and for worse. it is not by accident, that it was schumpeter, the great economist and short - term finance minister of the republic of austria, who said that the condition of the monetary system of a nation is a symptom of all its conditions, or in german, “ der zustand des geldwesens eines volkes ist ein symptom aller seiner zustande. ” if there is one lesson to be drawn from the eventful monetary history of austria, then it is that the greatest threat to financial and monetary stability has been, and continues to be, war. in fact, it was also war, which triggered the foundation of the nationalbank in 1816. when on june 1, 1816, emperor francis i signed the decrees establishing the privilegirte oesterreichische national - bank, he did so almost exactly one year after the conclusion of the congress of vienna, which marked the end of more than twenty years of war in europe. ultimately, the austrian empire emerged as one of the victorious powers, but the price of victory had been steep. a significant part of the war effort had been financed by issuing paper money, which resulted in high inflation. in addition, the austrian state had to declare default on its debt in 1811. as is always the case in periods of high inflation, the consequences for the population were disastrous. the agenda for the new bank can thus be summarized quite briefly : get the monetary system back in order. the most important ingredient for stability was the reestablishment of trust. the austrian people had lost their faith in