Richard Reisch, Die völkerrechtliche Bedeutung der Bank für internationalen Zahlungsausgleich (1930)

Richard Reisch’s article presents a lecture delivered to the Austrian League of Nations Association on 21 March 1930. As president of the Austrian National Bank, he approaches the newly established Bank for International Settlements (BIS) through the connection between monetary cooperation and international order. His argument moves from the economic origins of the reparations transfer problem through the bank’s functions to its legal constitution and political prospects. The central claim is qualified: the BIS cannot guarantee a solution to international monetary disequilibrium, but it creates an institutional setting in which central bankers may address problems previously dominated by interstate antagonism.

Reisch first distinguishes ordinary international payments from the unilateral obligations imposed after the war. Payments normally balance through trade and the bills generated by it, rather than through continuous shipments of money or gold. Temporary deficits could formerly be corrected through limited gold exports and interest-rate increases: credit restriction lowered domestic prices, stimulated exports, and restored equilibrium. Reparations upset this mechanism through their exceptional scale and duration. Expanding exports required changes in production and consumption, while creditor countries’ tariffs obstructed the imports necessary for payment. Deflation on the required scale threatened unemployment and political upheaval.

Foreign borrowing postponed rather than resolved this difficulty. Reisch endorses Schacht’s opposition to Germany’s growing external indebtedness and warns that credit can conceal the need for economic adjustment:

Kredit ist gewiß vielfach nützlich und heilsam, nämlich dann, wenn er in richtigen Dosen und zu richtigen Zwecken verwendet wird; er kann aber auch schädlich und tödlich wirken, wenn er lediglich als Narkotikum oder im Übermaß verwendet wird.

English translation: Credit is certainly often useful and beneficial, namely when it is used in the right doses and for the right purposes; but it can also have harmful and fatal effects when it is used merely as a narcotic or in excess.

His account nevertheless makes central-bank decisions, rather than gold movements alone, decisive. Gold accumulation could harm its recipient, as American speculation demonstrated, while monetary responses burdened other economies. Cooperation therefore became necessary, although Reisch also criticizes policies that neutralized gold movements while postponing price adjustment.

The Young Plan supplied the BIS with an immediate reparations function. Reisch explains the distinction between the unconditional annual payment of 660 million Reichsmarks and the remaining portion, whose transfer Germany could defer for up to two years under specified conditions. A special advisory committee would investigate such difficulties and reassess Germany’s capacity to pay, effectively preserving the possibility of reconvening expert examination. The unconditional portion, however, remained protected as the basis for issuing reparations-backed obligations. Institutional consultation thus qualified, without abolishing, Germany’s commitments.

Reisch places greater hope in central-bank cooperation than in the BIS’s prospective international financing business. Limited capital, uncertain deposits, and liquidity requirements constrained its lending capacity. Its operations also remained subject to the policies and objections of the relevant national central banks. He dismisses expectations of a world banknote, whose issue the statutes expressly prohibited. The more consequential possibility was a technically informed assessment of Germany’s economic capacity, insulated from political pressure:

Hierin sehe ich die große materielle Bedeutung der BIZ in völkerrechtlicher Beziehung.

English translation: In this I see the great substantive significance of the BIS in relation to international law.

Practical clearing arrangements connect this aspiration to legal innovation. Transfers between central-bank accounts could reduce payment costs; gold clearing could replace expensive physical shipments with transfers between deposits. Yet banks needed assurance that deposited gold would remain protected during war. Reisch identifies the treaty recognition of the BIS’s legal personality and the protection of its property against wartime restrictions or seizure as major advances. Their reach remained incomplete: Austria, the United States, and other non-participating states had not assumed equivalent obligations.

The bank’s constitutional machinery receives less unreserved approval. International agreements incorporated expert proposals and bound Switzerland to enact an agreed constituent instrument. Some statutory provisions could subsequently be changed independently of Swiss legislation, even contrary to Swiss law; other changes required a Swiss statute without Switzerland being obliged to secure one. This gave the host state potentially excessive influence over dissolution, relocation, and enlargement of the board. Reisch particularly objects that numerous central banks could be expected to entrust gold and follow common policies without adequate representation.

Es ist hier absolutes Neuland betreten, zum erstenmal sind Währungs- und Kreditfragen zum Gegenstand einer internationalen Vereinbarung gemacht worden.

English translation: Entirely new ground has been broken here; for the first time, monetary and credit questions have been made the subject of an international agreement.

For Reisch, this novelty also concerns who conducts international affairs. Central bankers and their trusted representatives enter a domain previously reserved for professional diplomacy and bureaucracy. He calls their participation a first step toward democratizing foreign policy through the inclusion of non-diplomatic actors. His conception of depoliticization thus depends on expert institutional authority, although his criticism of board representation acknowledges its unequal distribution.

The conclusion separates achievements from hopes. Removing foreign reparations officials and transferring disputes to banking bodies promised political reconciliation; legal personality and wartime property protection were concrete innovations. Monetary success remained uncertain. The BIS might enable discussion of gold requirements, redistribution, excessive accumulation, and agreed relations between reserves and credit expansion. National traditions and claims to international economic leadership nevertheless obstructed agreement.

Nun stellt die BIZ im Grunde genommen nichts anderes als eine Art Mikrokosmos des Völkerbundes in Währungs- und Kreditfragen dar.

English translation: Fundamentally, the BIS represents nothing other than a kind of microcosm of the League of Nations in monetary and credit matters.

This analogy captures the article’s significance: monetary cooperation becomes part of the institutional pursuit of peace, without its economic effectiveness being treated as assured.