It has been effectively applied by Germany's political class in an attempt to push for more European integration by surrendering to French pressure to 'communize' the deutschemark
and in the process dismantle one of the most trusted institutions of the postWorld War II era--the Deutsche Bundesbank.
The exchange rate criterion is less of a problem except for the UK; sterling has fluctuated by almost 30 percent against the deutschemark
in the past year, and the UK is not of course in the ERM.
The dollar has fallen to less than one-third of its 1970 value against the yen and is worth only 40 percent of its value against the deutschemark
The dollar's long decline in terms of the Swiss franc, the deutschemark
and the yen began with the same Vietnam War that so added to the U.
In the last three months the deutschemark
has appreciated by 3 3/4 per cent, whilst the yen has declined by 5 3/4 per cent.
I don't think we'll see a breakup of the euro and Germany returning to the deutschemark
, but what we could see is a more homogeneous euro area purged of its low performers," said Domenico Lombardi, a former executive board member at the IMF who is president of the Oxford Institute for Economic Policy.
Such a process is assumed in those analysts' interpretation to have been operative when sterling lost its role to the dollar in the 1930s, once the United Kingdom's balance of payments and monetary discipline flagged, and the dollar was spared such a fate in turn during the 1970s only because neither the deutschemark
nor the yen were a viable alternative at the time.
will bring an end to the Deutschemark
, French franc and the other
More importantly, Germany's currency, the deutschemark
, is synonymous with monetary stability, and its central bank, the Deutsche Bundesbank, is arguably one of the most respected in the world - certainly within Europe.
The dollar has strengthened considerably recently, and both the yen and the deutschemark
(along with the franc) have weakened.
This solid performance has been supported by a stable currency -- the kroon has been pegged first to the Deutschemark
and now to the Euro through a currency board for the past ten years -- as well as the government's commitment to a liberal business environment and its prudent fiscal stance.
It goes back a long way: from the hyperinflation of the early 1920s to the postwar currency reform, right up to when Germany gave up the deutschemark
," said Herz.