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Maastricht Treaty and the EU

Even in this Cold War environment, the then-West German Deutsche Mark had a special standing among European currencies, a standing rooted partly in the sheer power of the West German economy, and partly in the long-standing zeal with which German monetary authorities, historically anxious about inflation, sought to maintain a "strong" D-Mark.

The power of the D-Mark to hold or appreciate its value against other currencies, even in the face of severe economic pressures, was aptly demonstrated in 1990-92, when it appreciated five percent, on a trade-weighted basis, against a "basket" of all other currencies. (By trade-weighting it is meant that the behavior of each other country's currency relative to the D-Mark is factored in to the overall result in proportion to the share that country has of German trade.)

With the fall of the Berlin Wall and the reunification of Germany, the newly unified German economy faced enormous short-term strains, but gained a long-term potential to become even more of a driving engine in the European economy. These conditions further emphasized the challenges which the D-Mark posed to other European currencies. Faced with the task of rebuilding the former East German economy, inflationary pressures were inevitable, and the Deutsche Bundesbank, the German central bank, became all the more determine

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Maastricht Treaty and the EU. (1969, December 31). In LotsofEssays.com. Retrieved 18:22, October 22, 2014, from http://www.collegetermpapers.com/viewpaper/17435.html
 
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