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

Zank Wolfgang ()
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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

Economics and Business Review, 2019, vol. 5, issue 1, 53-78

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.

Keywords: decision-making processes; GDR economy; German monetary and economic union; German reunification; transition to market economy (search for similar items in EconPapers)
JEL-codes: F0 F2 F4 F5 K0 K2 K3 O1 P1 P2 P3 P5 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/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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