Germany was a strong and united country with a well organized banking system before the out break of the Second World War. In fact deposit banking started in Germany in 1619 with the foundation of the Bank of Hambury (BOH) which was modeled after the banks of Venice, founded in 1587 and Amsterdam founded in 1609. The BOH created a unit of account, the “Bankomarkâ€, which freed merchants from calculations with the many different coins flowing together in a trade center.
During the last 200 years, Germans have experienced several transactions in respect of monetary and financial system more importantly in currency. Firstly, from a mixed currency consisting predominantly of sliver coinage and to a lesser degree of gold coinage and banknote to a gold currency after the France. Secondly, from highly decentralized monetary system to centralized system after 1871. And thirdly, from a system in which banks were equally enjoying numerous privileges. Germany suffered a hyper-inflation after World War, 1, leading to a centrally planned economy from 1936 - 1948 for Germany as a whole and up until 1990 for its eastern part (East Germany).
After the Second World War, Germany was divided into two – the Federal Republic of German (FRG) or East Germany. Due to the differences in the political systems of both East and West Germany, their banking systems also differed. While East and West Germany operated a centralized system of banking, the reverse was the case in West Germany. However, today West Germany has absorbed East Germany into a United Germany Republic. The Germany banking system that is discussed in this course is that in the United Germany Republic. The fall of the Berlin Wall resulted in Germany Monetary Unification. The monetary unification between the two Germaines in mid-1990 was firmly embedded in the political merger of the two German States, the FRG and GDR. Thus, the German Economic Monetary and Social Union, GEMSU was launched on 1st July, with political union following on 3rd October 1990.
