The monetary policy of the Bundesbank

Over the long term, prices have risen less steeply in Germany than in most other industrial countries. At the same time, the Deutsche Mark has appreciated strongly in the foreign exchange markets and developed into the anchor currency of the European Monetary System. The stability of the Deutsche Mark owes a great deal to the monetary policy of the Bundesbank, which has been based on a clear statutory mandate, its independent status and its convincing monetary policy stance. Pursuant to the Bundesbank Act, the Bundesbank's primary function is to "safeguard the currency". To ensure that the Bundesbank is able to pursue this target without hindrance, it is independent of instructions from the government. These cornerstones of the German central bank's constition have meanwhile come to serve as a kind of model for the future European Central Bank.