Currency reform

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Currency reform in June 1948 , delivery of money to Hamburg

Currency reform means changing relevant features of the currency constitution . The currency is defined by the legislature responsible for the national economy in the monetary constitution; it is the money enacted by law in a certain temporally and spatially limited area, the currency area. As a result of a currency reform, different exchange rates for cash , bank balances , receivables and payables are legally set. As a rule, a currency reform is also associated with a change in the name of the currency .

Special cases of a currency reform

If only a simple conversion of all prices and values ​​takes place at a uniform rate, then one speaks of a currency conversion . A special case of currency reform is the abolition of a currency . This is done through the (voluntary or forced) introduction of the currency of another country ( foreign currency ).

In the old federal states of Germany the term is often used as a synonym for the introduction of the Deutsche Mark in June 1948; in contrast, in the new federal states it stands for the introduction of the monetary, economic and social union and for the introduction of the D-Mark in the GDR on July 1, 1990.

Harbingers of currency reform

Currency reforms are carried out for a number of reasons:

National bankruptcy

Measures to reduce the state's over-indebtedness are higher state revenues through strong economic growth, high inflation, and tax increases. On the other hand, drastic government spending cuts. A radical measure is the currency reform or, in the case of government bonds, the haircut . (See also article National Bankruptcy (section 'Countermeasures') .)

Arms race; War finance; lost wars

In particular, preparing for or waging wars can lead to excessive national debt (be it through war bonds and / or other financial instruments ). Currency reform is not uncommon, especially after a lost war. Examples are the currency reform of 1924 and the currency reform of 1948 (West Germany) .

Political reasons

In rarer cases, currency reforms are decided and implemented for political reasons.


Countries with high inflation rates and which they cannot control (through monetary and / or currency policy ) often try to end the loss of confidence in their own (old) currency through the psychological means of a fresh start. The newly introduced currency is then often provided with additional, credibility- creating or suggestive measures - for example a fixed exchange rate to a price-stable currency, an independent central bank, a link to a precious metal (→  gold standard ) or the like. Examples of such a currency reform are Argentina in 1991 and Germany in 1924 ( see below ).

Countries that have suffered from sustained high inflation rates in the past feel the long-term effects of inflation primarily in the form of high, non-transparent prices, that is, units of a low-value good cost a comparatively large number of monetary units. This causes high transaction costs , since the price labeling becomes complex for the supplier of goods and intransparent for the customer due to their size. The remedy here is the introduction of a new currency, in which the old currency is often "removed", ie an exchange rate of 10 n : 1 is set. Examples of such a currency reform are the introduction of the new Turkish Lira in 2004 or the Nouveau Franc in 1958 (100: 1). "From 1960 the word nouveau was dropped in the official currency denomination"; therefore January 1, 1960 is often mentioned as the date of this currency changeover. The distinction between old and new francs was common in everyday language until the 1970s.

Methods of softening stability

The independence of the central bank is suspended if it is instructed by intervention to violate the stability criteria. In 1914 this was brought about by war laws in Germany. After 1939, laws in Germany made it possible to finance war. The national debt ratio makes it possible to determine a country's level of debt. In the case of the euro crisis , the efforts to limit the over-indebtedness of individual countries in the monetary union through a debt brake are clearly visible .

National bankruptcy as the main cause

If the national debt exceeds the level of the gross domestic product, the interest burdens on the national debt noticeably constrict the other government expenditure, the current account becomes negative, then either economic growth, the reduction of government expenditures, tax increases, the sale of government assets, the haircut on government bonds or inflation can help bring. A historical example of the constriction of government spending due to high interest obligations is the French national budget of 1785, in which the finance minister Jacques Necker planned over a third of the expenditure (33.9%) for interest payments on public debt. The financing of government budget deficits through loans from the central bank or through the purchase of new government bonds by the commercial banks and later resale to the central bank has an expansive effect.

Planning a currency reform

The success of a currency reform depends largely on keeping the timing and individual measures secret; ideally it would take place surprisingly. Otherwise there is a risk of the informed or those who speculate correctly to move to other countries (“ capital flight ”), to more stable currencies and / or to real assets . Nevertheless, before the currency reform, laws on exchange and the new currency constitution must be formally passed.

Different conversion rates

In most cases, a currency reform consists of a legal change in the currency constitution, which stipulates an exchange of old currency units at a state-set exchange rate for units of the new currency. The main goal of the currency reform is to reduce national debt and the money supply. The forms of money and investments, debts and salaries are deliberately converted into the new currency using different conversion rates. Often only a certain "bounty" per person is initially exchanged at a preferred rate, while additional cash is only exchanged later and / or at a lower rate. The government bonds will be devalued. The state, companies and individual population groups are therefore treated unequally. Wages and salaries as well as rents are often adjusted 1: 1 to make a new start easier.

Cash and cashless payments

In the scenario of a currency conversion, the economist Dirk Meyer estimates the time for designing and creating new coins and banknotes to be at least twelve months. In the interim, the old banknotes can be stamped forgery-proof with magnetic ink and then used again. About two “bank holidays” are needed to convert deposits, debts, balance sheets and payments.

See also

Individual evidence

  1. ^ O. Pfleiderer: Currencies. In: Staatslexikon. Vol. 8. 6th edition. Herder, Freiburg 1963, Col. 406/407.
  2. Stefan Homburg : Memories of the German currency reforms . In: ifo Schnelldienst 2011, p. 17 ff.
  3. Stefan Homburg : The euro will collapse. In: Hamburger Abendblatt of June 22, 2011, p. 2.
  4. Cordt Schnibben: The violence of interest. In: Der Spiegel 46/2012, p. 62
  5. ^ Paul C. Martin: Cash - strategy against the crash. Ullstein, Frankfurt a. M./Berlin 1987, pp. 261-263.
  6. Helmut Lipfert: Introduction to Monetary Policy. CH Beck, Munich 1967, p. 196.
  8. Beate Kranz: "Germany should leave the euro" . In: Hamburger Abendblatt, December 5, 2011, p. 29

Web links

Commons : Currency Reform 1948  - Collection of pictures, videos and audio files
Wiktionary: Currency reform  - explanations of meanings, word origins, synonyms, translations
Wiktionary: Currency conversion  - explanations of meanings, word origins, synonyms, translations