About German Money
Modern Germany is a key member of the Eurozone, and as such it uses the euro as its currency. However, the monetary policies behind this pan-European currency are very German in origin and are based on the success of the last independent currency of Germany, the Deutsche Mark. The euro is almost as German as the Deutsche Mark was, and thoroughly German when it comes to the specifically German euro coins minted by the Bundesbank.
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The Deutsche Mark
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The last independent currency of Germany was the Deutsche Mark, or German mark. It was introduced in June 1948 by the Western Allies of the U.S., Great Britain and France in their joint occupation areas. From there it evolved into the currency of the Federal Republic of Germany (West Germany) and then unified Germany after the 1989 collapse of the Berlin Wall. The Deutsche Bundesbank was created in 1957 and assumed management of the currency. Because of Germany's 1920s and 1930s experience with hyperinflation, combating inflation became the first and foremost priority of the Bundesbank, and combined with the strength of the German economy, the Deutsche Mark became one of the world's most stable forms of money.
Denomination
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The Deutsche Mark was denominated in mark banknotes and coins and pfennig (penny) coins, and the mark was abbreviated as "DM." There were 10 DM, 20 DM, 50 DM, 100 DM and 200 DM banknotes. Coins were used for the smaller 1 DM, 2 DM and 5 DM roles. Pfennig coins were minted for 1, 2, 5, 10 and 50 pfennig.
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Replacement by the Euro
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Germany was one of the founding members of the European Community (EC), and then the European Union (EU). It was only fitting that the country spearheaded the creation of Europe's common currency, the Euro. Germany adopted the euro from the day of its introduction: January 1, 1999. However, Deutsche Marks continued as legal tender in Germany until February 28, 2002, and can still be exchanged into euros at any time at the fixed rate of 1.95 DM to 1 euro.
German Influence on the Euro
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German monetary thinking was strongly influential on the terms of the Maastricht Treaty, which created the euro, its governing European Central Bank (ECB) and the Eurozone (the group of countries using the euro). The Bundesbank and the German government were firmly committed to policies that kept inflation low, and those policies live on in the euro. Eurozone members were committed to keeping their government budget deficits below 3 percent of GDP, for example. Overall, the ECB has kept inflation lower than that of other Western countries, and interest rates a little higher. This has created, just as was the case with the Deutsche Mark, a strong and stable currency. In many ways, the euro is the direct heir of the old Deutsche Mark.
German Euro Coins
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Every member of the Eurozone is allowed to mint its own national euro and euro cent coins. All eurozone coins have the same head image, but their tail images are chosen by the national mint making the coin and reflect that country's identity. German coins use the oak twig (which was also on some pfennig coins); the Brandenburg Gate; and Germany's national symbol, the eagle.
Predecessors to the Deutsche Mark
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The Deutsche Mark was preceded by the Reichsmark, introduced in 1924. This was the money of the Depression-era Weimar Republic and the Nazi regime that replaced it. When Germany was divided during the Cold War, the Communist-led German Democratic Republic had its own mark.
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References
Resources
- Photo Credit Wikimedia Commons
