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Abbreviations used DM Deutsche EMS EMU European Monetary Union ERM Exchange Rate Mechanism of European Monetary System FBSO Federal Banking Supervisory Office FRG Federal Republic of GDR German Democratic Republic GMU German Monetary Union IMF International Monetary Fund PM Prime Minister

Acts of Parliament refer to Federal Republic of Germany.

Acheson, K., 128 supervision of, 56--64, 65-6 Act to Promote Economic Stability see also Bundesbank; Land Central and Growth (1967), 52 Banks Albeck, H., 137 Baste Committee on Banking Alesina, A. 43n 4, 48, 169 n15 Supervision, 57, 66 Allied military powers Becker, Jiirgen, xii, 56-4;7 reformed German , 116, Belgium, economic ties with 140 Germany of, 162 set up central banking structure, Black, S., 145-{} 11, 14 Bliim, N., 79 Anckar, Patrick, 147 Blumfield, A. J., 127 Arestis, P., 10, 44 Boeck, K., 148, 150 Aristotle, 122-5 Bohm-Bawerk, Eugen von, 120 audit of credit institutions, 59, 64-5 Bretton Woods exchange rate Australia, Reserve Bank of, 160 system, 3-4, 34, 47, 149, 179 Austria, policy on exchange rates of, Britain, see UK 160 Brittan, S., 125 Austrian , 140 Brunner, Karl, 127-8 Bundesbank () Baker, G., 170n 45 advises Federal Government, 5, Bank deutscher Lander, 11-12, 14, fr-7, 50-1, 68 140, 178 agree to second Tietmeyer to chair Banking Act (1961), 56, 57, 58-9, GMU negotiations, 68, 69 63-4 bank of issue, 48-9 banks branches, 18-19, 58 deposit guarantee schemes of, 63, 65 Central Bank Council of, see external audit of, 59, 64-5 Central Bank Council

181 182 Index

changed policy on international obliges Bundesbank to safeguard role of DM, 148-50 currency, 3, 32-3, 148 credibility within Germany, 9-10, regulates relations between Federal 48, 140 Government and Bundesbank, criticisms of policy, 2, 24-5 49-51 Bundesbank ( Contd.) regulates responsibilities of Directorate, 12, 14-15, 16 Bundesbank Directorate and and exchange rate policy, 46-7 Land Central Banks, 16-17 federal structure of, 12-13, 140 safeguards Central Bank Council and Germany's membership of from political manipulation, 15 IMF and EMS, 53-4 Bundesrat, 15 independence of, ix-x, xx, 5, 13-14, Bundestag 33,45,49,140 celebrate breakdown of instruments of monetary policy, Wall, 69-70 41-3 committee on conflict between Lombard policy 41-2 Federal Government and minimum reserve policy, 42-3 Bundesbank, 52 as model for European central discuss GMU treaty, 107 banking system, 45 informed of German treaty monetary policy decided by negotiations,98, 106 Central Bank Council, 13 Business Cycle Council for the Public monetary policy after GMU, 23-7 Sector, 52 monetary targeting, x, 27-30, 34-40 Caesar, R., 43 n2 open market policy, 42 central bank, independence of, 132-4 presidents of, 174-180 Central Bank Council of primary objective is stability of Bundesbank currency, ix-x, 3-4, 32-3, 50 composition and functioning of, rediscount policy 41-2 12, 13, 14-15 relations with Federal in ERM crisis, 176 Government, 13, 45, 49-52 in 1972 exchange rate crisis, 178 role in negotiations on GMU, 70, formation ofmonetary policy by, 48 73, 74, 85, 110, Ill in GMU negotiations, 68, 73-4, to set up organisation in GDR, 77, 77, 113 92-3 in Maastricht negotiations, 6-7 staff, 17-19 members of Federal Cabinet may success of, xix-xx, 164 attend meetings, 50-I supervision of credit institutions unanimity on EMU, 3 by, 58-9, 62, 63 central banking, ethics and morals in, supports EMU, 2-3 125-35 Bundesbank Act (1957) Chant, J. F., 128 established Central Bank Council, Childs, D. 119 14 Chicago School, 127 established federal structure, 12 CMEA (Council for Mutual established independence of Economic Assistance) countries, Bundesbank, 3,13,46 76, 86, 97 grants government right to defer 'conservative central banker', 131-2 Central Bank Council decisions, Council of Economic Experts, 71, 110 52 Cukierman, A., 48 Index 183

Delors, Jacques, 76 Eucken, W., 43 nl Delors Committee on EMU, 177 , see European single currency Denmark, economic ties with (ECB) Germany of, 162 Bundesbank prepares way for, 37, Deutsche Bundesbank, see 43 Bundesbank future independence, 47-8 Deutsche Mark (OM) future role in exchange rate policy, anchor currency in EMS, x, 25, 32, 54 141, 161-3 Thatcher opposed to, 177 has become international currency, European Central Banking System, 164--8 see European System of Central conversion rate of GDR Mark Banks into, 111-15 European Monetary System (EMS) critics of external strength, 2 Bundesbank contracting party, 54 in ERM crisis, 25-7 Deutsche Mark dominant extension of currency area to currency, 161-3 include GDR, 20, 75, 97-8, Ill, ERM crisis in, 25-6, 176 142 widening of exchange rate in international financial markets, margins, 47 148-57 European Monetary Union (EMU) in international trade, 142-8 Bundesbank supports, 2-3, 8-9 as reference currency, 160-4 economic basis required, xi as , 157~, 164--5 future success of, 55 stability since introduction, ix, 139 single currency, x-xi, 2, 47, 167, 168 Deutscher lndustrie- und Handelstag, uncertainties of, 37 117 European single currency, x-xi, 47, Dregger, A. 79, 96 167, 168 Dresden, 70 European System of Central Banks Duwendag, D., 44, 137 (ESCB) Bundesbank acts as model for, xx, Eastern European states 45 change from centralised planning Bundesbank involved in preparing, in, 110-11 3 importance ofDM in, 146, 147, 163 primary objective is to maintain refugees from, 69 price stability, 4, 55 Eatwell, J., 137 European Union (EU) (formerly ECBS, see European System of Community) Central Banks consulted re German monetary ECU (), 47, 54 union, 76 Einzig, P., 156 Council of Ministers, 8, 54 Emminger, Otto, 140, 149 Monetary Committee of, 6 profile, 178-9 exchange rate policy, possible EMS, see European Monetary conflicts with monetary policy, System 46-7 EMU, see European Monetary Union Erhard, Ludwig, 4, 75, 94, 116 Federal Accounting Office, 14 ESCB, see European System of Federal Banking Supervisory Office Central Banks (FBSO) ethics, economics and 122 established, 56 184 Index

cooperates with Bundesbank, 17, 58 Tietmeyer at, 69, 174 powers and instruments of, 60-4 see also W aigel, Theo (Minister of responsibilities of, 58-9 Finance) Federal Chancellery, 73, 85 Federal Ministry of Justice, 74 Federal Foreign Office, 79-80 see also Kinkel, K. Federal Government of Germany Federal Ministry of Labour and Bundesbank advises, 5, 6-7, 50-1, Social Affairs, 74, 84-5, 101-2 68 Federal Republic of Germany borrowing increased on monetary (FRG), see Germany union, 115-16, 117-19 Federal Supervisory Office for Chancellery, 73, 85 Securities Trading, 151 charged with task of establishing Fforde, John, 125 central bank, 48-9 financial markets choice of federal banking structure deregulation of, 35 by, 12 DM in, 148-57 Foreign Office, 79-80 intemationalisation of, 56, 66 as member of IMF, 53-4 Finland, use of DM in trade by, Ministry of Economics, see 147 Federal Ministry of Economics France, xx, 140-1 Ministry of Finance, see Federal Fratianni, M., 131 Ministry of Finance Friedman, Milton, 126-7, 129, 130 Ministry of Justice, 74 Frowen, Stephen F. xii, xix-xxi, Ministry of Labour and Social 10n2, 44, 119n1, 136-7, 157, Affairs, 74, 84-5 172, 174--8 offers GDR monetary, economic and social union, 71, 110 Gaddum, J.-W., 92 powers in banking supervision, Gawel, E., 31 n1 59-60 GDR Mark relations with Bundesbank, 13, 45, conversion to Deutsche Mark, 49-52 21-3, 73-4, 78, 79, 84-5, 89, 90, Federal Ministry of Economics 111~15 delegates in German treaty Modrow government seeks negotiations, 74 stabilisation of, 71 in discussions on conversion of Gebauer, W., 44 GDR Mark, 84-5, 113 Gebhard, Carola, xii, 139-73 proposes 'guiding principle' law in Gehrmann, D., 148-9 treaty negotiations, 75 Genscher, H. D., 79, 93 rights and powers of Minister, 51 Gerhardt, W., 146, 150 Tietmeyer at, 73, 174 Gerlach, S., 44 n6 Federal Ministry of Finance German Council of Industry and in discussions on conversion of Commerce, 117 GDR Mark, 84-5 German Democratic Republic draft treaty on GMU prepared by, (GDR) 73, 79 coalition agreement on in German treaty negotiations, 73, three-dimensional union, 75-6, 74, 86, 96, 102, 106-7 77, 78, 83 represented in 'expert talks' on currency conversion, 21-3, 73-4, monetary union, 72 78, 79, 84-5, 89, 90, 111-15 rights and powersofMinister, 51,60 free elections in, 72, 77 Index 185

implications for economy of second State Treaty, 109 conversion to OM, 81-2, 87, 98, German Unity Fund, 105, 106, 99-100 117-18 initial resistance to relinquishing Germany (prior to 1990 refers to sovereignty, 70-1 only) Kohl offers monetary, economic banking system in, 11-19, 140 and social union to, 20, 68-9 consensus on importance of stable social and political breakdown, currency, 1 69-70 constitutional implications of in treaty negotiations, 82-107 GMU, 94 passim constitutional provision for central German Monetary Union (GMU) bank, 47-8,48-9 Bundesbank advises Federal currency reforms, 11, 32-3, 48, Government on, 6 139--40 constitutional implications of, 94 external audit of credit institutions effect on Bundesbank's monetary in, 59, 64--5 policy,23-4, 28-9,37 foreign investment in, 152--4 effect on economies offormer GDR in, ix, 11, 140-1, 179 and FRO of, 115-19, 153--4 internal monetary stability having environmental protection under, 99 priority over exchange rate fiscal administration under, 102 stability, 3--4 GDR demands social union, 75--tJ international trade of, 142--tJ initial offer and 'expert talks', 70, stock market legislation in, 151 71-2, 110 unemployment in, 30 ownership problems arising from, unification of, see German 80-1, 87-9, 94, 103-4, 105 Monetary Union pressures for speed of, 20, 72, 73, see also Federal Government of 77 Germany safeguards against currency fraud Gieske, Leonhard, xiii, 11-19, 178, during, 96, 105 179-80 social security, health and pension Glucksmann, A., 135 arrangements under, 80, 95, 101 Goppl, H., 136 see also German treaty Grabley, P., 82 negotiations Grassman, S., 142 German political reunification, 92, 93 German treaty negotiations, 68-109 Hagen, J. von, 131 aim to provide for future economic Hahn, F., 124 system of GDR, 75 Hauser, K., 44 working paper prepared by Hausman, D. M. 134 Federal Ministry of Finance, 79, Hayek, F. A., 121, 128, 137 82, 83 Hefeker, C., 31 n4 first round, 82-3 Henn, R., 136 second round, 83--4 Herstatt Bank, 56 third round, 85--90 Hesse, H., 122, 137 fourth round, 91-5 Hetzel, R. L., 121 fifth round, 98-104 Hitler, economic policies under, fmal draft approved by FRG, 105, 11 107 Holscher, J. 119, 157, 172 Treaty signed, 107 Homann, K., 122 186 Index

IMF (International Monetary Fund), KoHner, L., 140 Germany's membership of, 53-4 Konig, R., xiv, 20-30, 142, 157 Indonesia, 160 Krause, Gunther inflation leads GDR delegation in treaty in Germany, ix, 11, 140-1 negotiations, 82-105 passim revival of debate on relation to in preliminary discussions on unemployment of, I, 33 German monetary union, 78 Issing, Otmar, xiii, 44n6, 120-38, 163 on reorganisation of Treuhand Italy, xix, 140-1, 146 agency, 107-8 Krenz, Egon, 70 Jagoda. B., 74, 87, 101 Japan Laidler, D., 121 currency used in trade, 145, 146 Lambsdorff, Otto Graf, 79 inflation in, 140-1 Land Central Bank of Hamburg, 179-80 Karakitsos, E., I 0 n2 Land Central Banks Kaufhold, P., 82 established, 11, 140 King, M., 125 main offices of Deutsche Kinkel, K., 74, 81, 88, 94, 96-7 Bundesbank, 12 Kirche und Staat (Church and State), management of, 15-16 70 presidents of, 14--15 Kittel, W., 74 reorganised after GMU, 12 Klasen, Karl, 178 responsibilities of, 16-17, 62 profile 179-80 sponsor branches in GDR, 93 Klemm, P., 74, 102 Lander governments Kliemt, H., 128, 134 contribute little to cost of Kloten, Norbert, xiv, 110-19 reunification, 115, 118 Kohl, Helmut, lOnl, 119n2 financial planning by, 52 briefs Tietmeyer on German treaty informed of treaty negotiations, negotiations, 68-9, 73, 74 84, 98 on Bundesbank policy, 10 postwar banking supervision by, 56 chairs coalition talks on GMU, 74, Lautenschlager, H. W., 74 90 Liquidity Consortium Bank, 65 informs Lander governments of Loef, H.-E., 130 progress towards union, I 06 Ludewig, J., 73, 76, 77-8, 96 makes GDR offer of monetary, Luxembourg, economic ties with economic and social union, 20, 71 Germany of, 162 opinion on conversion rate of GDR Mark, 115 on European pleased with outcome of GMU Union negotiations, 104, 105 Bundesbank advises on, 6-7 rejects additional taxes on Bundesbank supports road to reunification, 117 EMU in, 2 at signing of State Treaty, 107 independence of central bank wants to extend Federal pension under,45,48, 49,54--5 system to former GDR, 80 provides for permanent stability wants Tietmeyer as personal adviser union, 3, 4 in EMU negotiations, 109 Maisel, Sherman, 126 Kohler, H., 72, 74 Maiziere, Lothar de Index 187

elected PM of GDR, 72 Plato, 124 government's first policy Pohl, Karl Otto, 68, 72, II 0 statement, 79 profile, 177-8 opens treaty negotiations, 82 Pringle, Robert, xiv, xix-xxi, 164, at signing of State Treaty, 107 178-9 talks with Tietmeyer before treaty negotiations, 77, 81-2, 83 Rawls, J., 124 Mark (GDR currency), see GDR Reichenbach, Klaus, 78 Mark , 11, 17, 125 Marsh, David, 125 , 139 Masson, P.R., 160 Rogoff, K., 131 McHugh, F.P., 13fr7 Romberg, W., 82, 104-5, 107 McPherson, M. S., 134 Milgate, M., 136 Saunderson, A., 163 Modrow government Schacht, Hjalmar, 125-6 accepts offer of German monetary, Scharrer, H.-E., 142 economic and social union, Schauble, W., 79, 81 110--11 Schell, M., 119 established Treuhand agency, Schiller, Karl, 4, 178,180 107-8 Schlesinger, Helmut, 44n7 formed, 70 delegate in German treaty not prepared to relinquish negotiations, 74, 84-5, 91, 96, 98 sovereignty, 71 in informal discussions prior to monetary ethics, 122 treaty negotiations, 73 monetary stability learns of offer of GMU, 110 as public good, 33, 132 profile, 175-6 recent questioning of importance Schleusser, H., 104 of, 1-2 Schmid, Peter, xiv-xv, 32-43 and social equity, 4 Schmidt, Helmut, 180 morals and expertise, 123-5 Schmidt-Bleibtreu, Bruno, 73 Moreau (Governor of Banque de Schmitz, W., 122 France), 126 Schumpeter, J.A., 121 Muller, H., 125 Seiters, R., 73, 75, 79, 84, 91, 106, 107 Netherlands, economic links with Seitz, F., 147 Germany, 162 Sen, A., 135 n3 Netherlands Bank, 160 Senivongs, C., 160, 170n45 Neumann, M.J.M., 133 Siebke, J., 137 New Zealand, monetary policy in, Siegert, Walter, 82, 102 133 Simon, H.A., 135 Newman, P., 136 Simons, H.C., 127-9 Nijathawom, B., 160, 170n45 Staatsbank (State Bank ofGDR), 77, Nolling, W., 140 91-2, 93, 110, Ill Norman, Montagu, 125-6 State Treaty on Monetary, Economic North, D.C., 135 and Social Union, 109 see also under German treaty Olson, M., 43 n3 negotiations Stoll, W., 82, 92 Page, S.A.B., 145-6 Stolpe, M., 70--1 188 Index

Streissler, E.W., 119 in international trade, 146--8, Strong, Benjamin, 126 165-6, 167 Summers, L.H., 43 n4, 48 lost dominant role in European Supranowitz, S., 82 trade, 143-4 Sweden, use of DM in trade of, 147 traded against DM in foreign Swiss National Bank, 140 exchange markets, 155-7 Switzerland, inflation in, 140-1 USA (United States of America) central bank in, 18-19 Tandler, G., 104 inflation in, 140-1 Tanner, N.P., 135 n2 monetary policy of, 126 Tavlas, G.S., 142, 145-6 see also US dollar Terazono, E., 170 n45 USSR (Union of Soviet Socialist Thatcher, Margaret, 177 Republics) and German Thornton, Henry, 120-1 reunification, 76, 97-8 Tietmeyer, Hans, ix-xi, xv, 1-10, usury, religious objections to, 68-109, 119n2, 163, 169n18 120 profile, 174-5 Todter, K.-H., 44n6 Vaubel, R., 133 Treuhand agency, 90, 96, 102, 106, 107-8, 116 Wahlig, Bertold, xv-xvi, 45-55 Tullock, G., 123 Waigel, Theo, 68, 71, 72, 73, 102, 104, 119 UK (United Kingdom) Waller, C., 131 Bank of England, 18 Wenzel, S., 82 Central Statistical Office, 168 nll Willeke, Caroline, xvi, ~30 delinked currency from DM, xix Wood, G.E., 135n1 inflation in, 140-1 Wiirzen, D. von, 74 unemployment in Germany, 30 Yeager, LB., 136 revival of debate on relation to Yen, use in international trade and inflation, 1 investment of, 156, 159, 162, Unger, S., 148, 162 163, 164 US (United States) dollar declining as reference currency, 163 Ziel, Alwin, 82, 86