Cash Deposit Act

Basic data
Title:	Law amending the Foreign Trade Act
Short title:	Cash deposit law (not official)
Type:
Scope:
Legal matter:	Commercial law
Issued on:
Entry into force on:	January 1, 1972
Please note the note on the applicable legal version.

The Cash Depot Act is a law passed on December 23, 1971 to amend the Foreign Trade Act . The law came into force on January 1, 1972 and repealed on September 12, 1974. For old cases, however, it was valid until 1977.

With the Cash Depot Act, Minister Karl Schiller intended to curb the strong demand by German entrepreneurs for Eurodollar credits through this foreign exchange restriction . The law gives the Deutsche Bundesbank the option of setting a cash deposit rate of up to 50 percent for loans taken out abroad by ordinance. The corresponding amount of money should be deposited at the Bundesbank without interest. There were various exceptions, for example a minimum loan amount was set.

The cash deposit rate was set at 40 percent for the first time on March 1, 1972, the tax exemption was DM 2 million. On July 1, the cash deposit rate was increased to 50 percent and the tax exemption was reduced to DM 0.5 million. On December 14, 1972, the tax exemption was further reduced to DM 50,000. On February 1, 1974, the Bundesbank lowered the cash deposit rate to 20 percent.

Individual evidence

1. ↑ Law amending the Foreign Trade Act , Federal Law Gazette No. 135 of December 28, 1971
2. ↑ Thirty-second ordinance amending the Foreign Trade Ordinance , Federal Law Gazette No. 109 of September 14, 1974
3. ↑ Ordinance setting the deposit rate , Federal Law Gazette No. 15 of March 1, 1972
4. ↑ Twenty-first ordinance amending the Foreign Trade Ordinance , Federal Law Gazette No. 15 of March 1, 1972
5. ↑ Second ordinance on setting the deposit rate , Federal Law Gazette No. 58 of June 29, 1972
6. ↑ Twenty-second ordinance amending the Foreign Trade Ordinance , Federal Law Gazette No. 58 of June 29, 1972
7. ↑ Twenty-fourth ordinance amending the Foreign Trade Ordinance , Federal Law Gazette No. 135 of December 15, 1972
8. ↑ Third ordinance on setting the deposit rate , Federal Law Gazette No. 58 of January 30, 1974

Web links

• Bank for International Settlements: Annual Report for 1973 (PDF; 9.0 MB)
• Spiegel.de: Again speculative dollars are flooding into West Germany. Bonn and the Bundesbank want to threaten this with interest rate cuts and cash deposits. Washington Currency Agreement of February 28, 1972 Save
• zeit.de: The consequences of the Brussels decisions on economic and monetary policy of March 17, 1972
• Spiegel.de: Hot foreign money from Switzerland, which the German monetary authorities do not want, was deposited with the help of German straw men at the Cologne bank Herstatt on December 11, 1972