National Bank of Belgium

Creation and early decades

The National Bank was created by Minister Walthère Frère-Orban in 1850 with a unique hybrid status: in the form of a limited company, but with the main objective to carry out missions of general interest entrusted to it by legislation of 5 May 1850, including replacing the Société Générale de Belgique (SGB) as fiscal agent of the Belgian government. It came from a protracted process of negotiation with the Société Générale and the Banque de Belgique, until then the two main financial institutions in the country which had been negatively impacted by financial turmoil in 1848. As part of the same train of reform, Frère-Orban established the Caisse générale de retraite, which later became the Caisse Générale d'Épargne et de Retraite. Initially the National Bank was mainly an issuing and discounting bank, leaving the business of longer-term credit and investment to the SGB and others.

The National Bank's design was widely viewed as an improvement on earlier central banks. It soon became a source of reference in other countries, including the Netherlands with the reform of De Nederlandsche Bank in 1864 and Japan with the creation of the Bank of Japan in 1882. The NBB's prominent influence over the Bank of Japan's institutional design was paralleled 15 years later in terms of architectural influence, as Bank of Japan architect Tatsuno Kingo was inspired by the buildings designed by Hendrik Beyaert for the National Bank in Brussels and Antwerp. In 1910, a report of the U.S. National Monetary Commission noted: "The history of the National Bank of Belgium is of special interest to the student of banking systems because of [...] the ability of its founders to garner up the results of the experience of Belgium and of other countries in what they conceived to be the best attainable form of organization". Its charter was renewed in 1872 and in 1900, each time giving rise to extensive parliamentary debates about its mandate and setup.

World War I and interwar period

On 26 August 1914, shortly before the outbreak of World War I, minister of Finance Michel Levie ordered the National Bank to send its reserve assets to London. In retaliation, the German occupier force withdrew the National Bank's issuing privileges by decree of 20 November 1914, and entrusted it to the SGB instead. The SGB, however, still used the National Bank's printing presses. Once the war was over, the National Bank regained its issuing privileges.

During the European banking crisis of 1931, the National Bank had large holding in pound sterling and therefore incurred significant losses when the United Kingdom exited the Gold standard in September 1931. It had to rely on an emergency non-interest-bearing loan from the Belgian government to stay afloat.

World War II and postwar development

When Belgium was invaded in May 1940, its leadership and much of the staff again left the country and initially relocated to France. In late June, the German forces in Brussels forced the creation of a Bank of Issue (French: Banque d'Émission) to supply the occupied country's currency needs and to finance the payments of occupation costs. Following France's defeat, however, Governor Georges Janssen led the National Bank's return to Brussels by mid-July, even though he ensured that a representative in London could manage the Bank's foreign assets. The Bank of Issue kept acting as an adjunct to the National Bank, particularly by financing the clearing claims on Germany.

After Janssen's death in June 1941, the London-based Belgian government in exile repudiated the appointment of its Brussels-based successor Albert Goffin and instead expanded the London office into a fully-fledged administration-in-exile of the National Bank led by former Prime Minister Georges Theunis from late November 1941. A series of agreements in 1940 and 1941 resulted in the Belgian Congo joining the Sterling area. The Banque du Congo Belge thus became an important financial agency of the exiled government during the war, and temporarily severed links with its occupied head office in Brussels.

Meanwhile, the National Bank under occupation in Brussels kept operating, led until the liberation of Belgium by Goffin who was simultaneously President of the Bank of Issue, and with a German Commissioner, Hans von Becker, overseeing both institutions. The National Bank and Bank of Issue together financed the German war effort by printing large amounts of Belgian currency, triggering high inflation.

Before the war started, the National Bank had prudently moved one third of its gold reserves to the United Kingdom and another third to the United States and Canada. in early 1940, Finance Minister Camille Gutt directed the relocation of the last third, or 200 tons, to France. The gold was shipped from Ostend to Bordeaux and taken in custody by the Bank of France. With the advance of German troops, the latter further moved the National Bank's gold in early June 1940 to Lorient, a military port. The National Bank wanted the gold to be transported from there to the United States, but the French Navy shipped it instead to Dakar, where it landed on 28 June 1940 and was subsequently moved inland to Kayes in present-day Mali. In late 1940, collaborationist French Prime Minister Pierre Laval decided to hand over the National Bank's gold to the Reichsbank; the gold eventually reached Berlin in May 1942, via French Algeria and Marseille, and was melted into new ingots with false year marks at the Reichsmünze. On 5 February 1941, the London-based National Bank under Theunis's leadership sued the Bank of France in New York, eventually reaching a settlement in October 1944 by which the Bank of France agreed to full retrocession. The Bank of France in turn was able to recover 130 tons after the gold was found by U.S. forces together with stolen art in a salt mine in Merkers, Thuringia and reclaimed by the National Bank via the Tripartite Commission for the Restitution of Monetary Gold.