Historical Sketch

Post-war occupation of Germany ended in 1949. In the west, the Federal Republic (FRG) was formed from the US, British and French zones, while in the east, the Democratic Republic (GDR) was proclaimed in the Soviet zone. The partition came to an end in 1990, when the parliament of the GDR decided to dissolve the state and to join the Federal Republic.

Monetary History Overview

In June 1948, three days after the currency reform in the three western occupation zones of Germany and on the same day as in West-Berlin, the Allied Military Authority of the Soviet occupation zone of Germany and Berlin also carried out a currency reform. The German Issuing Bank began operations, later renamed into State Bank of the German Democratic Republic. The German Democratic Republic (GDR) Mark got introduced as new national currency. The Reichsmark banknotes were exchanged at par up to a threshold, any excess amounts received a lower exchange ratio or became worthless. Deposits were exchanged at staggered rated. The confiscation was overall lower than in the Western zones, but in 1957, a second confiscation was carried out when new banknotes got introduced. In 1953, the Mark got pegged to the Soviet Ruble. Beside the over-valued official rate parallel rates were created in the late 1950, the so-called "Valuta-Mark", at par with the German Mark of the Federal Republic, was applied to trade with hard currency economies. The monetary situation did not change until the end of the communist rule in 1989.

In October 1990, the German Democratic Republic united with the Federal Republic. Already in July, the two currency systems had been unified. The German Mark (FRG) replaced the GDR Mark at par, deposits above a threshold were cut by 50%. The former banknotes and coins were demonetized within a week.

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