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Military government weekly information bulletin
No. 23 (January 1946)

Highlights of policy,   pp. 4-9 PDF (2.6 MB)


Page 6

efficiency made it possible to provide
the huge funds needed for rearmament
and aggression, without causing obvious
inflation such as that which ruined Ger-
many during the last war. The banks,
and particularly the central bank or
Reichsbank, also provided technicians to
assist in looting the occupied countries,
without which Germany could not have
continued to fight. Individual German
banks -established or used existing agents
to exploit all Europe, both for private
profit and for the good of the nazi
regime. "Respectable" German bankers,
were used to preserve nazi assets in
Switzerland and  the   other  neutral
countries.
DECENTRALIZED BANKING
All this is now well known by the
leaders of Military Government. Thefirst
two steps will prevent it from happen-
ing again. The denazification of the bank-
ing system will remove those persons who
desire to renew the excess money creat-
ing powers of Germany, which can 'only
be used profitably for war; and the
second step will remove the systemwhich
permitted these persons the opportunity
to build a war machine.
Under the new decentralized banking
system each Land will establish a central
bank. This will be a banker's bank for
clearing checks, and for the movement
of funds between banks of other Linder
in the US Zone, and the other zones of
Germany. These central banks wvill also
help the commercial banks meet extra-
ordinary demands for credit and act as
bankers for their Land Governments.
However, they will not print their own
currency or be permitted to competewith
the commercial banks for ordinary com-
mercial business. Coordination and uni-
form supervision 'of the three LDinder
banks will be assured by the establish-
ment of a banking council for the entire
US Zone.
The commercial and savings banks,
which will deal directly with the public,
will be required to keep a minimum re-
serve of their assets on deposit with the
central bank of their Land. Thesereserves
will be on hand to settle clearing bal-
.ances. Keeping thesie reserves on deposit
with the central bank of the Land, will
provide increased stability and safety for
the individual banks, since they will no
longer be able to deplete their liquid
reserves beyond the danger point. .
No bank will be permitted to have or
establish branches outside the Landwhere
it locates its principal office. The predom-
inance of Berlin will be 'ended. Decen-
tralization will continue with. the aim
of limiting ;all banks to the Landkreis
or Stadtkreis in which they choose to
locate.
This program is not intended as the
final word !on the German financial sys-
tem. It is, rather, a step forward in a
direction which is known, whose length
or exact path may well be modified by
future quadripartite decisions. It is care-
fully planned, however, so that no back-
tracking will be necessary, so that it
will form part of the future financial po-
licy, which in turn forms part of the
principles established by the Potsdam,
Agreement.
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