This evolution culminated in the 1990s with the Bundesbank's rigid defense of the deutschemark
coupled with its staunch support for the maintenance of the EMS and its insistence on a particular institutional structure for Europe's economic and monetary union.
In practice, the Dutch authorities enforce an even narrower fluctuation band for the guilder, with deviations from its central rate vis-a-vis the Deutschemark
rarely exceeding 1/2 of a percentage point.
The dollar, the deutschemark
, and the yen meet the above criteria more than any other currency.
The dollar's long decline in terms of the Swiss franc, the deutschemark
and the yen began with the same Vietnam War that so added to the U.
EuroIndustries Germany pays dollars for its raw materials, spends Deutschemarks
on processing the chemicals in a factory in Germany that was purchased with Deutschemarks
, and then sells the finished products for US dollars.
the effective exchange rate of the Deutschemark
has remained broadly stable since mid-1993, as currency turmoil in Europe has abated following the adoption of the wider bands in the EMS;
Reflecting the credibility of the hard-currency approach of monetary policy, neither significant interest rate differentials nor interventions were needed to keep the schilling exchange rate vis-a-vis the Deutschemark
The picture that emerges from all this is that, whereas certain existing currencies are widely used in Europe, notably the Deutschemark
and, of course, the U.
In the last three months the deutschemark
has appreciated by 3 3/4 per cent, whilst the yen has declined by 5 3/4 per cent.
This solid performance has been supported by a stable currency -- the kroon has been pegged first to the Deutschemark
and now to the Euro through a currency board for the past ten years -- as well as the government's commitment to a liberal business environment and its prudent fiscal stance.
But the experience of the deutschemark
More importantly, Germany's currency, the deutschemark
, is synonymous with monetary stability, and its central bank, the Deutsche Bundesbank, is arguably one of the most respected in the world - certainly within Europe.
Part II considers both the reasons and international consequences of this change and examines how the Bundesbank has nevertheless succeeded in securing confidence in the external value of the Deutschemark
The soundness of Dutch economic policy -- characterised by a strong medium-term orientation centred around a close link between the guilder and the Deutschemark
and fiscal consolidation -- was underscored during the recent period of exchange rate turbulence, when the market never questioned the guilder-DM relationship and long-term interest differentials with Germany remained by far the narrowest of any EMS country.
The dollar has strengthened considerably recently, and both the yen and the deutschemark
(along with the franc) have weakened.