250px, Headquarters of the East German Central Bank
The State Bank of the GDR () was the
central bank
A central bank, reserve bank, national bank, or monetary authority is an institution that manages the monetary policy of a country or monetary union. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the mo ...
of
East Germany
East Germany, officially known as the German Democratic Republic (GDR), was a country in Central Europe from Foundation of East Germany, its formation on 7 October 1949 until German reunification, its reunification with West Germany (FRG) on ...
.
It was established on 1 January 1968 from the
Deutsche Notenbank
The Deutsche Notenbank () was a central bank established in 1948 to serve East Germany. It was replaced on by the Staatsbank der DDR.
Overview
In the immediate aftermath of German defeat in 1945, the Reichsbank was placed under joint Allied c ...
and took over the majority of the same tasks.
The State Bank of the GDR was responsible for the administration of the internal account settlement and banking system, the issue of money and control of money circulation within the GDR, administration of the
exchange control regulations and settlement of
foreign currency accounts with overseas companies and governments (Zahlungsverkehr by transfer). In addition, the bank bought and sold
financial securities
A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some countries and languages people commonly use the term "security" to refer to any for ...
and administered the purchase, sale and holding of
precious metals
Precious metals are rare, naturally occurring metallic chemical elements of high economic value. Precious metals, particularly the noble metals, are more corrosion resistant and less chemically reactive than most elements. They are usual ...
for foreign exchange purposes.
The state bank was also responsible for the account processing of the state institutions and
state enterprise
A state-owned enterprise (SOE) is a business entity created or owned by a national or local government, either through an executive order or legislation. SOEs aim to generate profit for the government, prevent private sector monopolies, provide goo ...
s, (
Volkseigener Betrieb
The Publicly Owned Enterprise (; abbreviated VEB) was the main legal form of industrial enterprise in East Germany. These state-owned enterprise were all publicly owned and were formed after mass nationalisation between 1945 and the early 1960s, ...
), having at least one main branch in each of the 15 administrative
subdivisions of the German Democratic Republic.
The internal foreign exchange rate regime
Another key task of the State Bank (on which it expended considerable resources) was attempting to control the circulation of
foreign exchange
The foreign exchange market (forex, FX, or currency market) is a global decentralized or over-the-counter (OTC) market for the trading of currencies. This market determines foreign exchange rates for every currency. By trading volume, it i ...
within the GDR. This was primarily because of concerns that the circulation of foreign exchange (particularly the
Deutsche Mark
The Deutsche Mark (; "German mark (currency), mark"), abbreviated "DM" or "D-Mark" (), was the official currency of West Germany from 1948 until 1990 and later of unified Germany from 1990 until the adoption of the euro in 2002. In English, it ...
) could lead to the establishment of a parallel currency that would encourage the
black market
A black market is a Secrecy, clandestine Market (economics), market or series of transactions that has some aspect of illegality, or is not compliant with an institutional set of rules. If the rule defines the set of goods and services who ...
, damage the
East German Mark
The East German mark ( ), commonly called the eastern mark ( ) in West Germany and after German reunification, reunification, was the currency of the East Germany, German Democratic Republic (East Germany). Its ISO 4217, ISO 4217 currency code w ...
and the internal economy, and undermine the international prestige of the GDR on its own soil.
Thus citizens of the GDR who were in the possession of foreign exchange (typically
Deutsche Mark
The Deutsche Mark (; "German mark (currency), mark"), abbreviated "DM" or "D-Mark" (), was the official currency of West Germany from 1948 until 1990 and later of unified Germany from 1990 until the adoption of the euro in 2002. In English, it ...
s sent by Western relatives or, for a small minority such as writers and artists, overseas royalties earnings) were obliged to deposit this in a dedicated foreign exchange account with the state bank. In order to encourage compliance, and thereby help “drain” the circulation of foreign currency from the economy, these accounts carried a 1%
interest rate
An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, ...
premium over the nationally determined fixed
interest
In finance and economics, interest is payment from a debtor or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distinct f ...
of 3.25% per annum paid on all other consumer
saving accounts.
However, although the interest rate on these accounts was 4.25% per annum, access to the
hard currency
In macroeconomics, hard currency, safe-haven currency, or strong currency is any globally traded currency that serves as a reliable and stable store of value. Factors contributing to a currency's ''hard'' status might include the stability and ...
in the account was far from easy. Technically the foreign currency on deposit was only available for use during authorised travel to Western countries, and was limited to the legitimate foreign currency travel expenses in the country concerned, plus the equivalent of 15 Deutsche Marks per day for other expenses. As the GDR only granted
visas
Visa most commonly refers to:
* Travel visa, a document that allows entry to a foreign country
* Visa Inc., a US multinational financial and payment cards company
** Visa Debit card issued by the above company
** Visa Electron, a debit card
** Vi ...
to travel to the West in limited circumstances to those below pensionable age (e.g. for weddings, funerals and serious illness of close relatives, business-based attendance at international conferences and trade fairs), and then usually only for very short periods, this effectively “neutralised” the foreign exchange held in the accounts of all those under 65 years old, and limited the usefulness of larger sums to those aged 65 and older.
Forum checks, Intershops and Genex
In order to overcome this obvious disincentive to compliance with the internal foreign
exchange rate regime
An exchange rate regime is a way a monetary authority of a country or currency union manages the currency about other currencies and the foreign exchange market. It is closely related to monetary policy and the two are generally dependent on many ...
, the State Bank allowed hard currency to be exchanged for
Forum check
Forum checks () were a form of hard currency in East Germany. From April 1979, all East Germans were required by law to convert any Deutsche Marks of West Germany (and other western currencies) they possessed into Forum checks at a branch of t ...
s – a form of internal currency (
foreign exchange certificate
A foreign exchange certificate (FEC) is a tool for foreign exchange control in countries where the national currency is subject to exchange controls or is not convertible. The arrangements vary significantly case by case.
Common types
Some of ...
s) that (crucially) could be spent at an
Intershop
Intershop was a chain of government-owned and operated retail stores in the German Democratic Republic (GDR, East Germany) in which only hard currencies (and later Forum checks) could be used to purchase high-quality goods, usually from or as ...
. These were a chain of special shops that offered high quality East German goods (that were otherwise difficult to obtain without joining a long waiting list) at reasonable prices and otherwise unobtainable Western consumer goods (usually at near
duty-free
A duty-free shop or store is a retail outlet whose goods are exempt from the payment of certain local or national taxes and duties, on the requirement that the goods will be sold to travelers who will take them out of the country, who will ...
price levels) – they were accessible only to foreign tourists with hard currency and
East German
East Germany, officially known as the German Democratic Republic (GDR), was a country in Central Europe from its formation on 7 October 1949 until its reunification with West Germany (FRG) on 3 October 1990. Until 1989, it was generally vie ...
citizens with Forum checks. Forum checks were purchased at the unrealistic rate of 1 East German Mark for 1 Deutsche Mark – the typical
black market
A black market is a Secrecy, clandestine Market (economics), market or series of transactions that has some aspect of illegality, or is not compliant with an institutional set of rules. If the rule defines the set of goods and services who ...
exchange rate
In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of ...
varied from 5 – 10 East German Marks to the Deutsche Mark.
In addition, it was also possible for holders of a foreign exchange account to order from the hard currency mail order GENEX catalog (GENEX gift service GmbH). This had originally been established to allow Westerners to legitimately send Eastern relatives Western brand (and export quality Eastern) consumer goods, wines, jewellery, delicacies etc. in exchange for hard currency. When used by the holder of a foreign exchange account for such an “internal” GENEX purchase, the cost of the order was debited directly from the account by
giro or cheque
clearing methods.
Political control of the State Bank
Although the State Bank was always politically subordinate to the GDR government, this was made explicit by a law of 19 December 1974 which defined the State Bank as an organ of the
Council of Ministers
Council of Ministers is a traditional name given to the supreme Executive (government), executive organ in some governments. It is usually equivalent to the term Cabinet (government), cabinet. The term Council of State is a similar name that also m ...
of the
German Democratic Republic
East Germany, officially known as the German Democratic Republic (GDR), was a country in Central Europe from Foundation of East Germany, its formation on 7 October 1949 until German reunification, its reunification with West Germany (FRG) on ...
and formalised the practice of the bank's president being a member of the Council of Ministers. While this stood in stark contrast to the political independence of
West Germany
West Germany was the common English name for the Federal Republic of Germany (FRG) from its formation on 23 May 1949 until German reunification, its reunification with East Germany on 3 October 1990. It is sometimes known as the Bonn Republi ...
’s
Bundesbank
The Deutsche Bundesbank (, , colloquially Buba, sometimes alternatively abbreviated as BBk or DBB) is the national central bank for Germany within the Eurosystem. It was the German central bank from 1957 to 1998, issuing the Deutsche Mark (DM). ...
it was common during this era for there to be political control over the nation's
central bank
A central bank, reserve bank, national bank, or monetary authority is an institution that manages the monetary policy of a country or monetary union. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the mo ...
-–though not usually to the extent found in
East Germany
East Germany, officially known as the German Democratic Republic (GDR), was a country in Central Europe from Foundation of East Germany, its formation on 7 October 1949 until German reunification, its reunification with West Germany (FRG) on ...
and the other
Eastern Bloc
The Eastern Bloc, also known as the Communist Bloc (Combloc), the Socialist Bloc, the Workers Bloc, and the Soviet Bloc, was an unofficial coalition of communist states of Central and Eastern Europe, Asia, Africa, and Latin America that were a ...
economies, where the policies and technical operation of the central bank were completely subservient to policies of the governing
Socialist Unity Party of Germany
The Socialist Unity Party of Germany (, ; SED, ) was the founding and ruling party of the German Democratic Republic (East Germany) from the country's foundation in 1949 until its dissolution after the Peaceful Revolution in 1989. It was a Mar ...
.
The State Bank of the GDR was also a member of the
International Bank for Economic Co-operation
International is an adjective (also used as a noun) meaning "between nations".
International may also refer to:
Music Albums
* ''International'' (Kevin Michael album), 2011
* ''International'' (New Order album), 2002
* ''International'' (The T ...
, a
Comecon
The Council for Mutual Economic Assistance, often abbreviated as Comecon ( ) or CMEA, was an economic organization from 1949 to 1991 under the leadership of the Soviet Union that comprised the countries of the Eastern Bloc#List of states, Easter ...
organisation founded in 1957 with its headquarters in
Moscow
Moscow is the Capital city, capital and List of cities and towns in Russia by population, largest city of Russia, standing on the Moskva (river), Moskva River in Central Russia. It has a population estimated at over 13 million residents with ...
. The nominal currencies used for trading, international clearing and settlement purposes by this organisation were transfer roubles and gold reserves.
Post reunification
After
German reunification
German reunification () was the process of re-establishing Germany as a single sovereign state, which began on 9 November 1989 and culminated on 3 October 1990 with the dissolution of the East Germany, German Democratic Republic and the int ...
the bank was
privatised
Privatization (rendered privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation wh ...
by
Treuhand
The (, " Trust agency"), colloquially referred to as , was an agency established by the government of the German Democratic Republic to reprivatise/ privatise East German enterprises, Volkseigene Betriebe (VEBs), prior to German reunification. ...
and parts of other banks were taken over (see also
Deutsche Kreditbank
Deutsche Kreditbank (DKB) is the second-largest direct bank in Germany with 5.8 million customers, fully owned by Bayerische Landesbank. In 2018 the company, with its parent company, ranked 7th on the list of the biggest banks in Germany.
Th ...
).
Accommodation
The Staatsbank occupied two adjacent urban blocks which before 1945 had been the headquarters, respectively, of
Dresdner Bank
Dresdner Bank AG () was a German bank, founded in 1872 in Dresden, then headquartered in Berlin from 1884 to 1945 and in Frankfurt from 1963 onwards after a postwar hiatus. Long Germany's second-largest bank behind Deutsche Bank, it was eventually ...
and of
Berliner Handels-Gesellschaft
The ''Berliner Handels-Gesellschaft'' (BHG, ) was a significant German joint-stock bank, founded in 1856 in Berlin. It relocated to Frankfurt following World War II.
On (with retroactive effect at ), BHG merged with Frankfurter Bank to form , ...
(BHG). Following German reunification, the Dresdner Bank sought
restitution
Restitution and unjust enrichment is the field of law relating to gains-based recovery. In contrast with damages (the law of compensation), restitution is a claim or remedy requiring a defendant to give up benefits wrongfully obtained. Liability ...
of its protected
neo-classical building of 1889 at the
Bebelplatz
The Bebelplatz (formerly and colloquially the Opernplatz) is a public square in the central Mitte (locality), Mitte district of Berlin, the capital of Germany. Following World War II, the square was renamed after August Bebel, a founder of the So ...
, but eventually built its
Berlin
Berlin ( ; ) is the Capital of Germany, capital and largest city of Germany, by both area and List of cities in Germany by population, population. With 3.7 million inhabitants, it has the List of cities in the European Union by population withi ...
headquarters on
Pariser Platz
Pariser Platz () is a square in the historic center of Berlin, Germany, situated by the Brandenburg Gate at the end of Unter den Linden boulevard. The square is named after the French capital of Paris to commemorate the victory of the Sixth ...
. The new owner of the original building was determined to be a subsidiary of Commerzbank.
After 1990 the former Dresdner Bank building had mixed fortunes functioning as a local branch of the Dresdner Bank (and featured in the film ''
Run Lola Run
''Run Lola Run'' (, ) is a 1998 German experimental thriller film written and directed by Tom Tykwer. The story follows a woman named Lola ( Franka Potente) who needs to obtain 100,000 Deutsche Mark in twenty minutes to save the life of her boy ...
''). In 2004 it was converted as part of the real estate project OpernCarrée by the hotelier Sir
Rocco Forte
Sir Rocco Giovanni Forte (born 18 January 1945) is an English hotel manager, hotelier and the chairman of Rocco Forte Hotels.
Early life
Born in Bournemouth, the son of Charles Forte, Baron Forte, and his wife Irene, he was educated at St P ...
into a luxury hotel (the Hotel de Rome). The hotel opened on 12 October 2006. The former BHG has become the Berlin seat of the public development bank
KfW
The KfW, which together with its subsidiaries DEG, KfW IPEX-Bank and FuB forms the KfW Bankengruppe ("banking group"), is a German state-owned investment and development bank, based in Frankfurt. As of 2014, it is the world's largest national ...
.
Presidents of the State Bank
* Willy Huhn (1948–1950)
*
Greta Kuckhoff
Margaretha "Greta" Kuckhoff ( Lorke; 14 December 1902 – 11 November 1981) was a Resistance member in Nazi Germany, who belonged to the Communist Party of Germany and the NKVD spy ring that was dubbed the Red Orchestra by the Abwehr. She was m ...
(1950–1958)
* Martin Schmidt (1958–1961)
* Rolf Wetzel (1961–1964)
* Helmut Dietrich (1964–1967)
*
Margarete Wittkowski
Margarete "Grete" Wittkowski (18 August 1910 – 20 October 1974) was a German economist and politician ( KPD / SED). Between 1961 and 1967 she served as deputy chair of the East German Council of Ministers, the only woman ever to hold this pos ...
(1967–1974)
* Horst Kaminsky (1974–1990)
See also
*
List of central banks
This is a list of central banks.
Central banks by alphabetical order
This is a list of central banks. Countries that are only partially recognized internationally are marked with an asterisk (*).
Major central banks by currency allocation p ...
References
{{Authority control
Banks of Germany
Germany, Democratic Republic
Economy of East Germany
1990 disestablishments in East Germany