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Insufficient data, short time spans, illusions and multiple pressures: designing the German Monetary Union in 1990

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  • Zank Wolfgang

    (Associate Professor, The Faculty of Social Sciences, Department of Culture and Global Studies, Aalborg University, Kroghstræde 3, 9220Aalborg, Denmark)

Abstract

The German unification in 1990 generated many benefits, but also many disappointments. After the introduction of the monetary union between the GDR and West Germany on 1 July 1990, the East German industry collapsed, and mass unemployment became persistent. Ever since the modalities of the monetary union have been discussed controversially. This paper reconstructs the decision-making processes and negotiations towards monetary union. To a high extent, this reconstruction is based on original documents. Early on in Bonn a consensus was reached that monetary union had to be introduced soon, the rapid decline of the GDR making stepwise approaches impossible. Many officials were aware of the detrimental effects of a 1:1 conversion of the wages. But few dared to go against the widespread demands for 1:1 in the GDR population and government, not the least because of over-optimistic promises before the elections in the GDR in March 1990.

Suggested Citation

  • Zank Wolfgang, 2019. "Insufficient data, short time spans, illusions and multiple pressures: designing the German Monetary Union in 1990," Economics and Business Review, Sciendo, vol. 5(1), pages 53-78, March.
    • Handle: RePEc:vrs:ecobur:v:5:y:2019:i:1:p:53-78:n:4
    DOI: 10.18559/ebr.2019.1.4
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    References listed on IDEAS

    as
    1. Sinn, Gerlinde & Sinn, Hans-Werner, 1992. "Kaltstart. Volkswirtschaftliche Aspekte der Deutschen Vereinigung," Monograph, Mohr Siebeck, Tübingen, edition 2, number urn:isbn:9783161459429.
    2. Dyson, Kenneth & Featherstone, Kevin, 1999. "The Road To Maastricht: Negotiating Economic and Monetary Union," OUP Catalogue, Oxford University Press, number 9780198296386, Decembrie.
    3. George A. Akerlof & Andrew K. Rose & Janet L. Yellen & Helga Hessenius, 1991. "East Germany in from the Cold: The Economic Aftermath of Currency Union," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 1-106.
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    More about this item

    Keywords

    decision-making processes; GDR economy; German monetary and economic union; German reunification; transition to market economy;
    All these keywords.

    JEL classification:

    • K0 - Law and Economics - - General
    • K2 - Law and Economics - - Regulation and Business Law
    • K3 - Law and Economics - - Other Substantive Areas of Law
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • P1 - Political Economy and Comparative Economic Systems - - Capitalist Economies
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies
    • P3 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions
    • P5 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems
    • F0 - International Economics - - General
    • F2 - International Economics - - International Factor Movements and International Business
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F5 - International Economics - - International Relations, National Security, and International Political Economy

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