Bank of England verhandelde Nazi goud in opdracht van de BIS

It was a long time coming, but the Bank of England on Tuesday posted online a history that details how the central bank cooperated with the Swiss-based Bank for International Settlements — known as the central banker’s central bank — to sell gold that Nazi Germany had stolen from Czechoslovakia in 1939.

The summary, written in 1950, details how the Bank of England transferred Czech gold held in its vaults on behalf of the BIS to the German government despite the fact that the U.K. government had frozen Czech assets held in Britain.

Germany invaded and occupied Czechoslovakia in March 1939. The gold transfer came the same month, and while the Bank of England’s role in the incident “rankled” for some time, the history was commissioned in 1950 to explain the U.K. central bank’s position, according to the summary. What emerges is a tale of a central bank and a governor that put a top priority on upholding the institutional integrity of the BIS, which had been founded in 1930 primarily to facilitate repatriations imposed on Berlin after the First World War.

According to the history, the Bank of England’s chief cashier received a request to transfer gold worth around 5.6 million pounds from the BIS No. 2 account to the No. 17 account. The Bank of England suspected that the No. 2 account belonged to the Czech National Bank, while the No. 17 account was believed to belong to Nazi Germany’s Reichsbank, the history recounts, while noting parenthetically that the identity of the account holders was “no business of theirs.”

The amount was transferred on the same day, with another, smaller amount transferred on March 22nd. Between March 21 and 31, the gold received by the account assumed to belong to the Reichsbank was disposed of, with around 4 million pounds worth going to the Belgian and Dutch central banks and the remainder being sold in London, the history said.

The document argues that the Bank of England’s hands were tied by the treaty governing the BIS:

_{It is clear from the (general) immunity granted to the BIS that no government which was party to the original agreement, and there were seventeen of them, including, of course, the Governments of the U.K. and France, could have taken any action unless they had been prepared, in time of peace too, to violate their Treaty obligation.}

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Why was the Bank of England so eager to please the BIS?

It’s clear the central bank saw a big potential role for the institution down the road. As the history moves on to war-time relations between the BOE and the BIS, it notes that the attitude of most Bank of England directors toward the institution was “governed by their anxiety to keep the BIS alive to play its part in the solution of post-war problems. For this reason, if no other, it was essential that it should be strictly impartial and neutral.”

We previously showed hard evidence of the Bank of England's complicit hiding of the truth about the quality of Bundesbank gold stored in the Fed's vaults. A few weeks later in a "completely unrelated" action, the Bundesbank dramatically shifted its recent stance, and demanded that its gold be repatriated into its own vaults (and we now know the impact that has had on the paper-physical paper markets). However, in yet another one of the 'darkest episodes in central banking history' the FT reports, the Bank of England facilitated the sale of gold that was looted by the Nazis after their invasion of Czechoslovakia in 1938. Of course, judging today's central bankers by this ethical (and potentially criminal) behavior of over 70 years ago is unfair but it is notable that the pattern of whatever-it-takes and at-all-costs decisions, coupled with pervasive opacity and stark unaccountability, appear to have been formed a long time ago.

Via The FT,

<sub>The Bank of England played a vital role in one of the darkest episodes in central banking history, facilitating the sale of gold looted by the Nazis after their invasion of Czechoslovakia in 1938.



According to a hitherto unpublished history of the BoE’s activities in and around the second world war, the UK’s central bank sold gold on behalf of the Reichsbank – which Germany’s central bank had seized from its Czech counterpart – after the UK government had frozen all Czech assets held in Britain following the Nazi invasion.



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The episode has long weighed on the reputation of the BIS. However, what has received less attention is the role of the BoE in the affair...</sub>



It would appear they knew what the right thing to do was... but politics meant ignore the ethics for the preservation of the status quo...





So just how powerful is the Central Bank?

Via The FT,

<sub>...the UK’s central bank prioritised the appeasement of the BIS over the British government’s wishes to freeze the sale of Czech assets.



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The history, written by BoE officials and completed in 1950 but never published, also records that the UK central bank sold gold after this date on behalf of the Nazis – and without waiting for the consent of the British government – on the back of pressure from the BIS.



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The documents also show that Montagu Norman, then governor of the BoE, was opaque in his communications with John Simon, the chancellor at the time, when pressed on whether the central bank still held the Czech gold.</sub>



Read the full story at the FT.

This episode did not go unnoticed in the US press...