Structural changes in German bank balance sheets

Abstract

The article reviews the most significant shifts which have occurred in the balance sheet structure of banks in Germany under the influence of the Second World War and of the monetary reform of 1948. The author places the primary emphasis on what he considers to be the most substantial change caused by the reform: the almost complete destruction of the banks’ capital and reserves, and the measures taken by the authorities towards facilitating their reconstruction. It is noted that the results thus far achieved are appreciable, but that the situation can still not be said to be a normal one, especially since the exceptionally rapid growth of deposits has helped keep the ratio of the banks’ own resources to their borrowed funds low. The author goes on to provide analysis of other banking developments in postwar Germany which also reflect the exceptional vicissitudes undergone by the economy. The closing section then provides a short review of the measures of credit control which the Central Bank first adopted in 1951 and which it later tightened.

JEL: E52, E58, G21