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

• Main Author: Zank Wolfgang
• Format: Article
• Language: English
• Published: Sciendo 2019-03-01
• Series: Economics and Business Review
• Subjects: decision-making processes; gdr economy; german monetary and economic union; german reunification; transition to market economy; k0; k2; k3; o1; p1; p2; p3; p5; f0; f2; f4; f5
• Online Access: https://doi.org/10.18559/ebr.2019.1.4

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.