Bundesbank

German Federal Bank

Logo of the German Federal Bank
Headquarters	Frankfurt, Hesse, Germany
Established	1957
President	Jens Weidmann
Central bank of	Germany 1 (1990–present) West Germany (1957–1990)
Preceded by	Bank deutscher Länder (Staatsbank der DDR2)
Succeeded by	European Central Bank (1999)3
Website	www.bundesbank.de
1 During the existence of the German Democratic Republic, the Bundesbank was the central bank for West Germany. The equivalent in the GDR was Deutsche Notenbank (renamed to Staatsbank der DDR in 1968)  2 The central bank of the GDR was merged into the German Federal Bank after Reunification of Germany.  3 The German Federal Bank still exists but many functions have been taken over by the ECB.

The German Federal Bank known in German as the Deutsche Bundesbank (pronounced [ˈdɔʏtʃə ˈbʊndəsˌbaŋk]; is the central bank of the Federal Republic of Germany and as such part of the European System of Central Banks (ESCB). Due to its strength and former size, the Bundesbank is the most influential member of the ESCB. Both the German Federal Bank and the European Central Bank (ECB) are located in Frankfurt, Germany. It is sometimes referred to as "Buba" for Bundesbank, while its official abbreviation is BBk.

The Bundesbank was established in 1957 and succeeded the Bank deutscher Länder, which introduced the Deutsche Mark on 20 June 1948. Until the euro was physically introduced in 2002, the German Federal Bank was the central bank of the former Deutsche Mark ("German Mark", sometimes known in English as the "Deutschmark").

The German Federal Bank was the first central bank to be given full independence, leading this form of central bank to be referred to as the Bundesbank model, as opposed, for instance, to the New Zealand model, which has a goal (i.e. inflation target) set by the government. Nowadays, the ECB also uses the Bundesbank model, making the concept the foundation of the entire Euro system.

The Bundesbank was greatly respected for its control of inflation through the second half of the 20th century. This made the German Mark one of the most respected currencies, and the Bundesbank gained substantial indirect influence in many European countries.

The history of the Bundesbank is inextricably linked with the history of the German currency after the Second World War. Following the total destruction after the war, the old Reichsmark was practically worthless, and a currency reform was implemented in the western occupation zones including West Berlin: on 21 June 1948, the D-Mark, or Deutsche Mark, replaced the Reichsmark. The currency reform was based on laws enacted by the Allied military government. In preparation, the Western Powers established a new two-tier central bank system in the occupied zones; in its federal structure, it was modeled on the Federal Reserve System of the USA. It comprised the central banks of the states (Länder) of the West German occupation zones and the Bank deutscher Länder in Frankfurt am Main, which was created on 1 March 1948. The central banks of the Länder acted as central banks within their areas of jurisdiction. The Bank deutscher Länder, whose share capital was held by the central banks of the Länder, was responsible for issuing bank notes, co-ordinating policy and various central tasks including management of foreign exchange. The supreme governing body of the two-tier central bank system was the Central Bank Council (Zentralbankrat) set up at the Bank deutscher Länder. It consisted of a president, the presidents of the central banks of the Länder and the president of the directorate (board) of the Bank deutscher Länder. Amongst other things, the Central Bank Council determined policy on bank rate and minimum reserve policy, open-market policy guidelines and granting of credit. After the negative experience with a central bank subject to government orders, the principle of an independent central bank was established. The Bank deutscher Länder was independent of German political bodies from the start, including the federal German government, which was active from September 1949. It achieved independence from the Allies in 1951.