The Birth, Life and Demise of a Currency: 50 Years of the Deutsche Mark

Abstract

The Deutsche Mark (DM) was born in June 1948, establishing a new monetary regime for West Germany. Its birth was acompanied by a range of economic reforms which together with the DM brought the considerable financial, monetary, and eocnomic stability on which rested the remarkable growth of the German economy in the next several decades. Though it is easy to think of the currency and the Deutsche Bundesbank as being almost inseparable, the founding of the Bank actually came ten years later than the creation of the DM. It is about the Deutsche Bundesbank that much of the story in this book is concerned. And it is to the Duetsche Bundesbank that most of the DM's strength should be attributed. That strength was quickly recognised. The DM became the key currency of the EMS and one of the world's major currencies; by the 1980s it was second to the US dollar in terms of the proportion of world trade that was invoiced in it. That so much was achieved in such a relatively short time makes the history of the currency remarkable. What is perhaps even more remarkable is its future. That a currency which achieved so much, and which was for that reason so popular with the citizens of the country which used it is to disappear into EMU in 2002 is, at the least, surprising. An observer who simply saw what had happened, without any knowledge of the economic and, particularly, the political background, would be as at a loss to understand what had happened as the traveller who beheld the statue of Ozymandias. The movement towards