Rudolf  Schmidt (Copyright)  Geld Cash Finanzen
Press Release, 02 Jul 2015

German monetary union on July 1, 1990 was politically necessary despite painful economic consequences – Greece, similar to the GDR back in the 1980s, in urgent need of reform – the crisis of European monetary union potentially boosts integration Precisely 25 years ago, on July 1, 1990,... more

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Debate, 02 Jul 2015

Various proposals are currently being suggested to encourage higher foreign direct investment in countries within the euro area, particularly between individual member states. The intended goal is to assist in stimulating economic growth in the euro area. Against this background, this article... more

Karl-Heinz Laube  / (Copyright)  Waehrungsunion D-Mark DDR
Interview, 01 Jul 2015

Professor Fratzscher, German monetary union came into force 25 years ago on July 1, 1990. On the same day, capital controls in Europe were removed, laying the foundations for a European monetary union and the euro. What lessons can Europe learn from the German monetary union?In 1990, there was... more

puje (Copyright)  Diagramm Statistik Aufschwung
Press Release, 25 Jun 2015

GDP is set to grow by 1.8 percent this year and 1.9 percent next year – the global economy is slowly picking up steam, and the euro area is showing solid growth performance – possible risks such as Greece leaving the euro area are creating a strain on the economy The German economy is... more

Dewing (Copyright)  Rolltreppe Fahrtreppe Rolltreppen
Interview, 25 Jun 2015

Dr. Fichtner, will the German economy perform as well in the second half of 2015 as it did in the first half of the year? We assume that the German economy will lose some of its momentum. One-off effects such as plummeting oil prices played a major role in the strong gains made during the winter... more

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by Marcel Fratzscher, in DIW Economic Bulletin

Precisely 25 years ago, on July 1, 1990, German monetary union came into force. On the same day, capital controls in Europe were abolished, creating the basis for European monetary union and the euro. These two historical events fundamentally changed Germany and the rest of Europe. Both German and European monetary union were and still are being heavily criticized and debated. Was the design of German monetary union wrong? Was it a mistake to adopt the euro? Particularly in terms of finding a solution to the current European crisis, it is important to understand what lessons Europe can take from German monetary union.

by Ferdinand Fichtner, Philipp König, in DIW Economic Bulletin

On July 1, 1990, when capital controls in the European Economic Community were removed, the path was paved for the introduction of the euro. This path was marked by a compromise between two schools of thought—those who assumed that the creation of the European Central Bank would be followed by greater economic convergence and political integration, and those who saw the single currency as the coronation of European cooperation and economic convergence. In the initial years following the introduction of the single currency, the compromise as set down in the Maastricht Treaty—the speedy introduction of the single currency, on the one hand, and better cooperation in fiscal policy matters on the other—neither strengthened the institutional foundations of the monetary union nor advanced the political integration process. This resulted in economic divergence and tension in the euro area, which in recent years culminated in a severe crisis. It was only in response to this crisis that some of the necessary changes to the institutional structures of the monetary union were made. There is much evidence to suggest that, when the monetary union was originally being created, such tension and even crisis situations were consciously tolerated because of the stimulus for deeper integration this would provide. Such political maneuvering is very risky, however, since it can lead to the loss of public support for the integration process, thereby threatening the very existence of the common currency. To advance the European project, it is imperative that governments do not rely on the momentum inherent in crisis situations, but instead press ahead with the next stages of integration and take an active approach to bolstering the institutional foundations of the currency union.

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