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Abbreviations Used DM EMS EMU ERM Deutsche Mark European Index Abbreviations used DM Deutsche Mark EMS European Monetary System EMU European Monetary Union ERM Exchange Rate Mechanism of European Monetary System FBSO Federal Banking Supervisory Office FRG Federal Republic of Germany 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 currency, 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 Central Bank, 140 Brunner, Karl, 127-8 Bundesbank (Deutsche 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 as 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 Berlin 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 Euro, see European single currency Denmark, economic ties with European Central Bank (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 reserve currency, 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 (European currency unit), 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 West Germany 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 inflation 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.
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