The independence of the Bundesbank (Federal Bank of Germany) - Consequenceof an American decree?

The political independence of the European Central Bank is an important pre condition to price stability in a monetary system based on the paper standa rd. As the Euro was to be a stable currency, the European Central Bank was modelled after the Federal Bank of Germany (Deutsche Bundesbank), famous fo r its nonpartisanism which brought about the exceptional monetary stability enjoyed in Germany since the 1950s. This article shows, however, that the political independence of the West German Central Bank was decreed by the A merican occupying power after World War II. German financial experts and po liticians at the time were heavily opposed to this action, but had little c hance to be heard. The West German central banking system was de-centralize d and the "Bank deutscher Lander" (BdL) was established by the US Office of Military Government and was to act as an institution independent of the Ge rman federal government. The BdL was soon highly regarded by the German pub lic. Therefore, all efforts by German politicians, including Chancellor Kon rad Adenauer, to replace the BdL with a central bank more open to governmen tal influence were in vain. Finally, the Deutsche Bundesbank, as we know it today, was created in 1975 and clearly based on the example of the BdL.