Search

Twenty-five years ago, East Germany adopted the deutschmark as its currency. In terms of East German economic development, monetary union proved to be a disaster. With virtually no warning, East Germany's few productive factories and businesses were exposed to free market competition; industrial production collapsed in a way unparalleled in history. Nevertheless, for political reasons, introducing monetary union at the start of the process of system transformation was almost unavoidable. Given the insecure foreign policy situation, the aim was to seize the chance of reunification and push through monetary union to create an irreversible fait accompli. Moreover, this move was intended to put a brake on the massive exodus of people from East Germany. Admittedly, it also buttressed the widespread illusion among the East German population that a strong currency would facilitate fast-track income parity on West German levels. This illusion, however, also encouraged excessive wage hikes which only served to intensify the shock of alignment in summer 1990, complicate economic renewal in eastern Germany, and increase the financial costs. [ABSTRACT FROM AUTHOR]

Precisely 25 years ago, on July 1, 1990, German monetary union came into force. On the same day, capital controls in Europe were abolished, creating the basis for European monetary union and the euro. These two historical events fundamentally changed Germany and the rest of Europe. Both German and European monetary union were and still are being heavily criticized and debated. Was the design of German monetary union wrong? Was it a mistake to adopt the euro? Particularly in terms of finding a solution to the current European crisis, it is important to understand what lessons Europe can take from German monetary union. [ABSTRACT FROM AUTHOR]

Regional financial arrangements and monetary integration in East Asia and Europe have made considerable progress in recent years. This paper discusses whether governments in both regions, Japan and Germany as the most advanced regional economies in particular, can use the new dynamics as levers to raise their status vis-à-vis the United States. It will be argued that activities are defensive rather than offensive, aiming at protecting the respective region from financial risk. Japan, in particular, would find it difficult to raise its status vis-à-vis the United States significantly by promoting regional financial and monetary integration, principal reasons being actor heterogeneity, the role of China, hesitation to bear burden and risk, and the historical legacy of a bank-oriented system. [ABSTRACT FROM AUTHOR]

The article traces the history of post-World War II pension insurance in Germany, particularly with respect to financial benefit amounts. The impact of the currency switch in 1948 from Reichsmark to Deutschmark on pension benefits is discussed. Compromises on benefit obligations of insurance carriers and the federal government are reviewed.

An article is presented which the editors lay out the economic rationale for flexible rather than fixed currency rate-setting in Germany. The author of the article dismisses the economic trust in gold as the soundest basis for a currency and the belief in an ever-favorable trade balance. Free market principles are said to argue on behalf of adopting flexible currency systems.

The article discusses the findings of a German expert commission on economic development and federal policy. A key issue addressed dealt with the economic goals of full employment, measured growth, and balance of trade while maintaining the stability of the currency. The commission reported that the greatest threat to a stable currency involved foreign trade.

A preface is presented to the March 1965 issue of "Sozialer Fortschritt."

The article discusses wildcat strikes in German industry stemming not so much from the wage autonomy exercised by labor and industry as by workers' struggling to deal with inflation and the federal government's slowness in coming to grips with an imprudent currency policy. The negative consequences of inflation on social security benefit recipients are noted.