Science Fair Project Encyclopedia
It was founded on 1st January 1876 - shortly after the initial unification of Germany in 1871. The Reichsbank was founded by the take over of the central bank of Prussia. Its first president was Herrmann von Dechend .
Before the unification in 1871 Germany had 31 central banks - the Notenbanken (note banks). Each of the independent states issued their own money. In 1870 a law was passed that forbid the formation of further central banks. In 1874 a banking law was put in front of the Reichstag (the German parliament). After several changes and compromises the law was passed in 1875. Four of the Notenbanken continued to exist until 1914.
The history of the Reichsbank was volatile. Until the Great War it produced a very stable currency Mark. The expenses of the war caused inflationary pressure and the Mark started to decrease in value. This culminated in the German hyperinflation of 1922/1923. The Mark became the Paper Mark (Papiermark). Economic reforms and the issue of a new provisional currency - the Rentenmark stabilised the monetary development. In 1924 the Reichsbank started to issue the Reichsmark, which it managed until 1948. In this year both the Reichsmark and the Reichsbank ceased to exist. In West Germany the monetary policy was taken over by the state banks (Landesbanken) and later by the Bundesbank. In East Germany the state banks were succeeded by the Staatsbank der DDR (State bank of the GDR).
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