WHAT IS 'D-Mark'

D-Mark is a common abbreviation for the Deutsche Mark, meaning German mark, the official currency of the Federal Republic of Germany. First issued in 1948, it was the official currency of West Germany and later the unified German state until the adoption of the euro in 1999. The official currency code is DEM.

BREAKING DOWN 'D-Mark'

D-Mark, or Deutsche Mark, is usually written as one word in German, Deutschmark. In the Western Occupation Zone, the American military government first issued the Deutschmark in 1948 as a viable alternative currency to MEFO bills and the Reichsmark. It was adopted formally as the official currency of the Federal Republic of Germany, known commonly as West Germany, a year later.

Before the adoption of the Deutschmark, there were two currencies in Germany, the Reichsmark and the Metallurgische Forschungsgesellschaft Bill, often abbreviated as a Mefo bill or a MEFO bill. By the end of World War Two, the Reichsmark was unbacked as the Greater German Reich had collapsed, as were the MEFO bills. The MEFO bills were themselves technically merely promissory notes from a balance sheet entity corporation which did not technically exist, and therefore were technically worthless even before the fall of the German government. The economy of Germany immediately following the war was nearly nonexistent, and most transactions occurred through barter. Even before then, in Germany, prices and wages had been controlled by the government, but hard currency was plentiful. During the war, the black market had ballooned in size. As a result, the adoption of the Deutschmark at a rate of 1 D-Mark to 10 R-Marks wiped out 90 percent of debt, public and private, which drastically helped the economy rebound.

Stability

The Deutschmark earned a reputation as a reliable, stable currency during the latter half of the 20th century. This was because of a number of factors, including the prudence of the Bundesbank, the national bank of Germany, and because of shrewd political interference. Compared to the franc and the lire, the currency retained its value even in times of economic upheaval. The policies which led to the stability of the Deutschmark, in fact, form the basis of the current European Central Bank’s policies towards the euro, attempting to maintain stability despite the widely variant economies of the European Union member states.

East German Counterpart

The Deutschmark’s counterpart in the German Democratic Republic, commonly referred to as East Germany, was the Ostmark. Carefully controlled and regulated by the overbearing Communist government of East Germany, it was never widely used and was quickly sidelined in the 1990 reunification of Germany. Reunified Germany used the Deutschmark until it converted to the euro in 1999.

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