Deutsche Bank Abbreviated: BBk, also internationally: DBB is the German central bank headquartered in Frankfurt and part of the European System of Central Banks. It is a federal legal entity under public law and belongs to the indirect public administration. The bank’s headquarters in Frankfurt am Main has the status of supreme federal authority (see the German Bundesbank Act). The history of the German Central Bank is closely linked to the monetary history of Germany after the end of World War II. Given the complete collapse of the German currency after the war, currency reform became necessary. On June 21, 1948,
The German mark replaced the practically worthless German mark in the western occupation zones, including West Berlin. Currency reform was based on laws passed by the Allied military government. In preparation, the Western powers established a new two-tier central banking system in their occupied territories, which was modeled on the Federal Reserve System of the United States of America (USA) in its strict federal structure. It consisted of the legally independent state central banks of the individual countries in the Western occupation zones and the German States Bank in Frankfurt am Main, founded on 1 March 1948.
A nation’s central banks functioned as central banks in their regions. The German States Bank, whose capital was owned by the states’ central banks, was responsible for issuing banknotes, coordinating policies, and some central functions—including foreign exchange management. The highest body in the two-tier central banking system was the Central Bank Council established at the German States Bank. It consists of its president, the heads of the state central banks, and the chairman of the board of directors of the German States Bank. The Central Bank Board specifically determined the discount policy and the newly implemented minimum reserve policy
The principle of an independent central bank is well established in Germany
After bad experiences with the central bank adhering to government instructions, the principle of an independent central bank became firmly established in Germany after World War II. From the beginning, the German States Bank was independent of German state bodies, including the federal government (the Adenauer I Cabinet which became active in September 1949). It gained its independence from the Allies in 1951. It was through Article 88 of the Basic Law that it came into force On May 24, 1949,
The federal government was forced to create a currency and a central bank called the German Bundesbank, thus replacing the occupation law that had been in force until then with German law. . However, the legislature only implemented this mandate in 1957. With the German Central Bank Act (BBankG) of 26 July 1957, the dual structure of the central bank system was abolished. Responsibilities were transferred to the newly founded German Central Bank (Deutsche Bundesbank). For this purpose, the state’s central banks, including the Central Bank of Berlin, were merged with the German States Bank.
The state central banks are no longer legally independent central banks, but are part of the German Bundesbank as head offices. It retained the name “Central Bank of the State” and remained partially independent in its decisions, for example, regarding participation in monetary policy decisions on the Central Bank Council so-called reserved jurisdiction.
The Board of Directors, based in Frankfurt am Main, consists of the President and Vice-President of the Bundesbank as well as up to six other members. As the executive body, it is responsible for implementing the decisions of the Central Bank Board. The Board of Directors administered and administered the Bank and was responsible in particular for transactions with the federal government and its special funds
Decision making on the monetary and credit policy of the German Central Bank
The Central Bank Board continued to act as the highest decision-making body of the Bundesbank, deciding on the monetary and credit policy of the Bundesbank and setting guidelines for its organization and management. In addition to the members of the Board of Directors, it also included eleven presidents of the country’s central banks.
The central banks in the state carried out the work and administrative matters that fell within their area on their own responsibility. The Federal Banking Law explicitly assigned them business with public bodies and administrations as well as with credit institutions in their area. Branches (now branches) were also affiliated with the state’s central banks. Management was the responsibility of the board of directors,
During the Cold War, the Bundesbank bunker at Cochem in the Moselle Valley was built from 1962 to 1964 to store emergency currency. Up to 15 billion German marks were stored in the top-secret facility, which operated until 1988. On December 5, 1974, the Bundesbank was the first central bank to announce a money supply target for the following year after the adoption of the Principles and with the State Treaty on the Establishment of a Monetary Union Economic and social agreements between the Federal Republic of Germany and the then German Democratic Republic, which entered into force on July 1, 1990,
The D-Mark became the only legal tender in both German states. At the same time, responsibility for monetary policy within the expanded scope of the German mark was transferred to the Bundesbank. For this purpose, a temporary administrative office was established in Berlin on May 3, 1990 in early implementation of the state treaty signed on May 18, 1990. It continued to operate until October 31, 1992, after the unification of the state in October. 3, 1990.
Establishment of the European Economic and Monetary Union
The Maastricht Treaty, which entered into force on November 1, 1993, laid the foundations for the European Economic and Monetary Union. National responsibilities for monetary policy have been transferred to the European Community level to the European System of Central Banks (ESCB), which consists of the European Central Bank (ECB) and the national central banks (NCBs) of the EU countries. With regard to the European Economic and Monetary Union, the Bundesbank Act was last substantively amended in 2002 with the Seventh Act amending the Bundesbank Act of 30 April 2002, which gave the bank its current regulatory constitution.
During the financial crisis of 2007 and the euro crisis, the Bundesbank’s total assets, TARGET2 balance and deposit facilities increased significantly. In March 2012, total assets rose to more than €1 trillion for the first time. On average in 2002, the balance sheet totaled €222.4 billion. In August 2012, it amounted to 1,135.4 billion euros, five times what it was in 2002. Central banks in the euro area, including the German Bundesbank, manage the European large-value payment system.
TARGET2. When the platform was launched in November 2007, the German Bundesbank had a balance of 72.6 billion euros. In August 2012, the Bundesbank’s claims on other national central banks in the euro area (positive TARGET2 balance) rose to an all-time high of €751.4 billion
