A cheque, or check, is a document that orders a bank to pay a specific amount of money from a person's account to the person in whose name the cheque has been issued. The person writing the cheque, known as the drawer, has a transaction banking account where their money is held; the drawer writes the various details including the monetary amount, a payee on the cheque, signs it, ordering their bank, known as the drawee, to pay that person or company the amount of money stated. Cheques are a type of bill of exchange and were developed as a way to make payments without the need to carry large amounts of money. Paper money evolved from promissory notes, another form of negotiable instrument similar to cheques in that they were a written order to pay the given amount to whoever had it in their possession. A cheque is a negotiable instrument instructing a financial institution to pay a specific amount of a specific currency from a specified transactional account held in the drawer's name with that institution.
Both the drawer and payee may be legal entities. Cheques are order instruments, are not in general payable to the bearer as bearer instruments are, but must be paid to the payee. In some countries, such as the US, the payee may endorse the cheque, allowing them to specify a third party to whom it should be paid. Although forms of cheques have been in use since ancient times and at least since the 9th century, it was during the 20th century that cheques became a popular non-cash method for making payments and the usage of cheques peaked. By the second half of the 20th century, as cheque processing became automated, billions of cheques were issued annually. Since cheque usage has fallen, being replaced by electronic payment systems. In an increasing number of countries cheques have either become a marginal payment system or have been phased out; the spellings check and cheque were used interchangeably from the 17th century until the 20th century. However, since the 19th century, the spelling cheque has become standard for the financial instrument in the Commonwealth and Ireland, while check is used only for other meanings, thus distinguishing the two definitions in writing.
In American English, the usual spelling for both is check. Etymological dictionaries attribute the financial meaning to come from "a check against forgery", with the use of "check" to mean "control" stemming from a check in chess, a term which came into English through French, Latin and from the Persian word "shah" or "king"; the cheque had its origins in the ancient banking system, in which bankers would issue orders at the request of their customers, to pay money to identified payees. Such an order was referred to as a bill of exchange; the use of bills of exchange facilitated trade by eliminating the need for merchants to carry large quantities of currency to purchase goods and services. There is early evidence of using cheques. In India, during the Mauryan period, a commercial instrument called the adesha was in use, an order on a banker desiring him to pay the money of the note to a third person; the ancient Romans are believed to have used an early form of cheque known as praescriptiones in the 1st century BCE.
Beginning in the third century CE, banks in Persian territory began to issue letters of credit. These letters were termed čak, meaning "document" or "contract"; the čak became the sakk used by traders in the Abbasid Caliphate and other Arab-ruled lands. Transporting a paper sakk was more secure than transporting money. In the ninth century, a merchant in one country could cash a sakk drawn on his bank in another country. In the 13th century in Venice the bill of exchange was developed as a legal device to allow international trade without the need to carry large amounts of gold and silver, their use subsequently spread to other European countries. In the early 1500s in the Dutch Republic, to protect large accumulations of cash, people began depositing their money with "cashiers"; these cashiers held the money for a fee. Competition drove cashiers to offer additional services including paying money to any person bearing a written order from a depositor to do so, they kept the note as proof of payment.
This concept went on to spread to elsewhere. By the 17th century, bills of exchange were being used for domestic payments in England. Cheques, a type of bill of exchange began to evolve, they were called drawn notes, because they enabled a customer to draw on the funds that he or she had in the account with a bank and required immediate payment. These were handwritten, one of the earliest known still to be in existence was drawn on Messrs Morris and Clayton and bankers based in the City of London, dated 16 February 1659. In 1717, the Bank of England pioneered the first use of a pre-printed form; these forms were printed on "cheque paper" to prevent fraud, customers had to attend in person and obtain a numbered form from the cashier. Once written, the cheque was brought back to the bank for settlement; the suppression of banknotes in eighteenth-century England further promoted the use of cheques. Until about 1770, an informal exchange of cheques took place between London banks. Clerks of each bank visited all the other banks to exchange cheques, whilst keeping a tally of balances between them until they settled with each other.
Daily cheque clearing began around 1770 when the bank clerks met at the Five Bells, a tavern in Lombard Street in the City of London, to exchange all their cheques in
Macau or Macao the Macao Special Administrative Region of the People's Republic of China, is a special administrative region on the western side of the Pearl River estuary in southern China. With a population of 653,100 in an area of 32.9 km2, it is the most densely populated region in the world. Macau was a colony of the Portuguese Empire, after Ming China leased the territory as a trading post in 1557. Governing under Chinese authority and sovereignty, Portugal was given perpetual occupation rights for Macau in 1887; the colony remained under Portuguese control until 1999. As a special administrative region, Macau's system of government is separate from that of mainland China. A sparsely populated collection of coastal islands, the territory has become a major resort city and the top destination for gambling tourism, it is the ninth-highest recipient of tourism revenue and its gaming industry is seven times larger than that of Las Vegas. Although the city has one of the highest per capita incomes in the world, it has severe income inequality.
Macau has a high Human Development Index and the fourth-highest life expectancy in the world. The territory is urbanised and most development is built on reclaimed land; the first known written record of the name "Macau", rendered as "Ya/A Ma Gang", is in a letter dated 20 November 1555. The local inhabitants believed that the sea goddess Mazu had blessed and protected the harbour and called the waters around A-Ma Temple using her name; when Portuguese explorers first arrived in the area and asked for the place name, the locals thought they were asking about the temple and told them it was "Ma Kok". The earliest Portuguese spelling for this was Amaquão. Multiple variations were used until Amacão / Amacao and Macão / Macao became common during the 17th century standardising as Macao, Macau today. Macau Peninsula had many names in Chinese, including Jingao and Haojingao; the islands Taipa and Hengqin were collectively called Shizimen. These names would become Aomen, Oumún in Cantonese and translating as "bay gate" or "port gate", to refer to the whole territory.
The region is first known to have been settled during the Han dynasty. However, Macau did not develop as a major settlement until the Portuguese arrived in the 16th century; the first European visitor to reach China by sea was the explorer Jorge Álvares, who arrived in 1513. Merchants first established a trading post in Hong Kong waters at Tamão, beginning regular trade with nearby settlements in southern China. Military clashes between the Ming and Portuguese navies followed the expulsion of the Tamão traders in 1521. Despite the trade ban, Portuguese merchants continued to attempt settling on other parts of the Pearl River estuary settling on Macau. Luso-Chinese trade relations were formally reestablished in 1554 and Portugal soon after acquired a permanent lease for Macau in 1557; the small population of Portuguese merchants became a growing city. The Roman Catholic Diocese of Macau was created in 1576, by 1583, the Senate had been established to handle municipal affairs for the growing settlement.
Macau was at the peak of its prosperity as a major entrepôt during the late 16th century, providing a crucial connection in exporting Chinese silk to Japan during the Nanban trade period. Although the Portuguese were prohibited from fortifying Macau or stockpiling weapons, the Fortaleza do Monte was constructed in response to frequent Dutch naval incursions; the Dutch attempted to take the city in the 1622 Battle of Macau, but were repelled by the Portuguese. Macau entered a period of decline in the 1640s following a series of catastrophic events for the burgeoning colony: Portuguese access to trade routes was irreparably severed when Japan halted trade in 1639, Portugal revolted against Spain in 1640, Malacca fell to the Dutch in 1641. Maritime trade with China was banned in 1644 following the Qing conquest under the Haijin policies and limited only to Macau on a lesser scale while the new dynasty focused on eliminating surviving Ming loyalists. While the Kangxi Emperor lifted the prohibition in 1684, China again restricted trade under the Canton System in 1757.
Foreign ships were required to first stop at Macau before further proceeding to Canton. Qing authorities exercised a much greater role in governing the territory during this period; as the opium trade became more lucrative during the eighteenth century, Macau again became an important stopping point en route to China. Following the First Opium War and establishment of Hong Kong, Macau lost its role as a major port. Firecracker and incense production, as well as tea and tobacco processing, were vital industries in the colony during this time. Portugal was able to assert its sovereignty. Portugal occupied nearby Lapa and Montanha, but these would be returned to China by 1887, when perpetual occupation rights over Macau were formalised in the Sino-Portuguese Treaty of Peking; this agreement obligated Portugal from ceding Macau without Chinese approval. Despite occasional conflict between Cantonese authorities and the colonial government, Macau's status remained unchanged through the republican revolutions of b
Economics is the social science that studies the production and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents. Microeconomics analyzes basic elements in the economy, including individual agents and markets, their interactions, the outcomes of interactions. Individual agents may include, for example, firms and sellers. Macroeconomics analyzes the entire economy and issues affecting it, including unemployment of resources, economic growth, the public policies that address these issues. See glossary of economics. Other broad distinctions within economics include those between positive economics, describing "what is", normative economics, advocating "what ought to be". Economic analysis can be applied throughout society, in business, health care, government. Economic analysis is sometimes applied to such diverse subjects as crime, the family, politics, social institutions, war and the environment; the discipline was renamed in the late 19th century due to Alfred Marshall, from "political economy" to "economics" as a shorter term for "economic science".
At that time, it became more open to rigorous thinking and made increased use of mathematics, which helped support efforts to have it accepted as a science and as a separate discipline outside of political science and other social sciences. There are a variety of modern definitions of economics. Scottish philosopher Adam Smith defined what was called political economy as "an inquiry into the nature and causes of the wealth of nations", in particular as: a branch of the science of a statesman or legislator a plentiful revenue or subsistence for the people... to supply the state or commonwealth with a revenue for the publick services. Jean-Baptiste Say, distinguishing the subject from its public-policy uses, defines it as the science of production and consumption of wealth. On the satirical side, Thomas Carlyle coined "the dismal science" as an epithet for classical economics, in this context linked to the pessimistic analysis of Malthus. John Stuart Mill defines the subject in a social context as: The science which traces the laws of such of the phenomena of society as arise from the combined operations of mankind for the production of wealth, in so far as those phenomena are not modified by the pursuit of any other object.
Alfred Marshall provides a still cited definition in his textbook Principles of Economics that extends analysis beyond wealth and from the societal to the microeconomic level: Economics is a study of man in the ordinary business of life. It enquires how he uses it. Thus, it is on the one side, the study of wealth and on the other and more important side, a part of the study of man. Lionel Robbins developed implications of what has been termed "erhaps the most accepted current definition of the subject": Economics is a science which studies human behaviour as a relationship between ends and scarce means which have alternative uses. Robbins describes the definition as not classificatory in "pick out certain kinds of behaviour" but rather analytical in "focus attention on a particular aspect of behaviour, the form imposed by the influence of scarcity." He affirmed that previous economists have centred their studies on the analysis of wealth: how wealth is created and consumed. But he said that economics can be used to study other things, such as war, that are outside its usual focus.
This is because war has as the goal winning it, generates both cost and benefits. If the war is not winnable or if the expected costs outweigh the benefits, the deciding actors may never go to war but rather explore other alternatives. We cannot define economics as the science that studies wealth, crime and any other field economic analysis can be applied to; some subsequent comments criticized the definition as overly broad in failing to limit its subject matter to analysis of markets. From the 1960s, such comments abated as the economic theory of maximizing behaviour and rational-choice modelling expanded the domain of the subject to areas treated in other fields. There are other criticisms as well, such as in scarcity not accounting for the macroeconomics of high unemployment. Gary Becker, a contributor to the expansion of economics into new areas, describes the approach he favours as "combin assumptions of maximizing behaviour, stable preferences, market equilibrium, used relentlessly and unflinchingly."
One commentary characterizes the remark as making economics an approach rather than a subject matter but with great specificity as to the "choice process and the type of social interaction that analysis involves." The same source reviews a range of definitions included in principles of economics textbooks and concludes that the lack of agreement need not affect the subject-matter that the texts treat. A
Legal tender is a medium of payment recognized by a legal system to be valid for meeting a financial obligation. Paper currency and coins are common forms of legal tender in many countries. Legal tender is variously defined in different jurisdictions. Formally, it is anything. Thus, personal cheques, credit cards, similar non-cash methods of payment are not legal tender; the law does not relieve the debt obligation. Coins and banknotes are defined as legal tender; some jurisdictions may restrict payment made other than by legal tender. For example, such a law might outlaw the use of foreign coins and bank notes or require a license to perform financial transactions in a foreign currency. Designation of a particular form of money as legal tender means "that the designated money is valid payment for all debts unless there is a specific agreement to the contrary". In some jurisdictions legal tender can be refused as payment if no debt exists prior to the time of payment. For example, vending machines and transport staff do not have to accept the largest denomination of banknote.
Shopkeepers may reject large banknotes: this is covered by the legal concept known as invitation to treat. The right, in many jurisdictions, of a trader to refuse to do business with any person, means a purchaser may not insist on making a purchase and so declaring a legal tender in law, as anything other than an offered payment for debts incurred would not be effective. Under U. S. federal law, cash in U. S. dollars is a legal offer of payment for antecedent debts when tendered to a creditor. By contrast, federal statutes do not require that someone, not a pre-existing creditor must accept currency or coins as payment for goods or services. Private businesses may formulate their own policies on whether to accept cash unless state law requires otherwise; the term "legal tender" is from French tendre, meaning to offer. The Latin root is tendere, the sense of tender as an offer is related to the etymology of the English word "extend". Demonetization is the act of stripping a currency unit of its status as legal tender.
It occurs whenever there is a change of national currency: The current form or forms of money is pulled from circulation and retired to be replaced with new notes or coins. Sometimes, a country replaces the old currency with new currency; the opposite of demonetization is remonetization, in which a form of payment is restored as legal tender. Coins and banknotes may cease to be legal tender if new notes of the same currency replace them or if a new currency is introduced replacing the former one. Examples of this are: The United Kingdom, adopting decimal currency in place of pounds and pence in 1971, Banknotes remained unchanged. In 1968 and 1969 decimal coins which had precise equivalent values in the old currency were introduced, while decimal coins with no precise equivalent were introduced on 15 February 1971; the smallest and largest non-decimal circulating coins, the half penny and half crown, were withdrawn in 1969, the other non-decimal coins with no precise equivalent in the new currency were withdrawn in 1971.
Non-decimal coins with precise decimal equivalents remained legal tender either until the coins no longer circulated, or the equivalent decimal coins were reduced in size in the early 1990s. The 6d coin was permitted to remain in large circulation throughout the United Kingdom due to the London Underground committee's large investment in coin-operated ticketing machines that used it. Old coins returned to the Royal Mint through the UK banking system will be redeemed by exchanging them for legal tender currency with no time limits; the successor states of the Soviet Union replacing the Soviet ruble in the 1990s. Currencies used in the Eurozone before being replaced by the euro are not legal tender, but all banknotes are redeemable for euros for a minimum of 10 years. India demonetised its 500 and 1000 rupee notes on 8 November 2016; this action affected 86 percent of all cash in circulation. The demonetisation action was intended to curb black money, the hoarding of unaccounted cash, sponsorship of terrorism, but led to long queues from bank runs, leaving more than 30 people dead.
The old notes are now being replaced by new 2000 rupee notes. The Philippines has ceased 2 peso and 50 centavo coins of Flora and Fauna Series in 2000, due to overminting of the coins of BSP Series that has not included the 2 peso and 50 centavo coins of that series. Individual coins or banknotes can be demonetised and cease to be legal tender, but the Bank of England does redeem all Bank of England banknotes by exchanging them for legal tender currency at its counters in London regardless of how old they are. Banknotes issued by retail banks in the UK are not legal tender, but one of the criteria for legal protection under the Forgery and Counterfeiting Act is that banknotes must be payable on demand, therefore withdrawn notes remain a liability of the issuing bank without any time limits. In the case of the euro, coins an
A bank is a financial institution that accepts deposits from the public and creates credit. Lending activities can be performed either indirectly through capital markets. Due to their importance in the financial stability of a country, banks are regulated in most countries. Most nations have institutionalized a system known as fractional reserve banking under which banks hold liquid assets equal to only a portion of their current liabilities. In addition to other regulations intended to ensure liquidity, banks are subject to minimum capital requirements based on an international set of capital standards, known as the Basel Accords. Banking in its modern sense evolved in the 14th century in the prosperous cities of Renaissance Italy but in many ways was a continuation of ideas and concepts of credit and lending that had their roots in the ancient world. In the history of banking, a number of banking dynasties – notably, the Medicis, the Fuggers, the Welsers, the Berenbergs, the Rothschilds – have played a central role over many centuries.
The oldest existing retail bank is Banca Monte dei Paschi di Siena, while the oldest existing merchant bank is Berenberg Bank. The concept of banking may have begun in ancient Assyria and Babylonia, with merchants offering loans of grain as collateral within a barter system. Lenders in ancient Greece and during the Roman Empire added two important innovations: they accepted deposits and changed money. Archaeology from this period in ancient China and India shows evidence of money lending. More modern banking can be traced to medieval and early Renaissance Italy, to the rich cities in the centre and north like Florence, Siena and Genoa; the Bardi and Peruzzi families dominated banking in 14th-century Florence, establishing branches in many other parts of Europe. One of the most famous Italian banks was the Medici Bank, set up by Giovanni di Bicci de' Medici in 1397; the earliest known state deposit bank, Banco di San Giorgio, was founded in 1407 at Italy. Modern banking practices, including fractional reserve banking and the issue of banknotes, emerged in the 17th and 18th centuries.
Merchants started to store their gold with the goldsmiths of London, who possessed private vaults, charged a fee for that service. In exchange for each deposit of precious metal, the goldsmiths issued receipts certifying the quantity and purity of the metal they held as a bailee; the goldsmiths began to lend the money out on behalf of the depositor, which led to the development of modern banking practices. The goldsmith paid interest on these deposits. Since the promissory notes were payable on demand, the advances to the goldsmith's customers were repayable over a longer time period, this was an early form of fractional reserve banking; the promissory notes developed into an assignable instrument which could circulate as a safe and convenient form of money backed by the goldsmith's promise to pay, allowing goldsmiths to advance loans with little risk of default. Thus, the goldsmiths of London became the forerunners of banking by creating new money based on credit; the Bank of England was the first to begin the permanent issue of banknotes, in 1695.
The Royal Bank of Scotland established the first overdraft facility in 1728. By the beginning of the 19th century a bankers' clearing house was established in London to allow multiple banks to clear transactions; the Rothschilds pioneered international finance on a large scale, financing the purchase of the Suez canal for the British government. The word bank was taken Middle English from Middle French banque, from Old Italian banco, meaning "table", from Old High German banc, bank "bench, counter". Benches were used as makeshift desks or exchange counters during the Renaissance by Jewish Florentine bankers, who used to make their transactions atop desks covered by green tablecloths; the definition of a bank varies from country to country. See the relevant country pages under for more information. Under English common law, a banker is defined as a person who carries on the business of banking by conducting current accounts for his customers, paying cheques drawn on him/her and collecting cheques for his/her customers.
In most common law jurisdictions there is a Bills of Exchange Act that codifies the law in relation to negotiable instruments, including cheques, this Act contains a statutory definition of the term banker: banker includes a body of persons, whether incorporated or not, who carry on the business of banking'. Although this definition seems circular, it is functional, because it ensures that the legal basis for bank transactions such as cheques does not depend on how the bank is structured or regulated; the business of banking is in many English common law countries not defined by statute but by common law, the definition above. In other English common law jurisdictions there are statutory definitions of the business of banking or banking business; when looking at these definitions it is important to keep in mind that they are defining the business of banking for the purposes of the legislation, not in general. In particular, most of the definitions are from legislation that has the purpose of regulating and supervising banks rather than regulating the actual business of banking.
However, in many cases the statutory definition mirrors the common law one. Examples of statutory definitions: "banking business" means the business of receiving money on current or deposit account and collecting cheques drawn by or paid in by customers, the making
Germany the Federal Republic of Germany, is a country in Central and Western Europe, lying between the Baltic and North Seas to the north, the Alps to the south. It borders Denmark to the north and the Czech Republic to the east and Switzerland to the south, France to the southwest, Luxembourg and the Netherlands to the west. Germany includes 16 constituent states, covers an area of 357,386 square kilometres, has a temperate seasonal climate. With 83 million inhabitants, it is the second most populous state of Europe after Russia, the most populous state lying in Europe, as well as the most populous member state of the European Union. Germany is a decentralized country, its capital and largest metropolis is Berlin, while Frankfurt serves as its financial capital and has the country's busiest airport. Germany's largest urban area is the Ruhr, with its main centres of Essen; the country's other major cities are Hamburg, Cologne, Stuttgart, Düsseldorf, Dresden, Bremen and Nuremberg. Various Germanic tribes have inhabited the northern parts of modern Germany since classical antiquity.
A region named Germania was documented before 100 AD. During the Migration Period, the Germanic tribes expanded southward. Beginning in the 10th century, German territories formed a central part of the Holy Roman Empire. During the 16th century, northern German regions became the centre of the Protestant Reformation. After the collapse of the Holy Roman Empire, the German Confederation was formed in 1815; the German revolutions of 1848–49 resulted in the Frankfurt Parliament establishing major democratic rights. In 1871, Germany became a nation state when most of the German states unified into the Prussian-dominated German Empire. After World War I and the revolution of 1918–19, the Empire was replaced by the parliamentary Weimar Republic; the Nazi seizure of power in 1933 led to the establishment of a dictatorship, the annexation of Austria, World War II, the Holocaust. After the end of World War II in Europe and a period of Allied occupation, Austria was re-established as an independent country and two new German states were founded: West Germany, formed from the American and French occupation zones, East Germany, formed from the Soviet occupation zone.
Following the Revolutions of 1989 that ended communist rule in Central and Eastern Europe, the country was reunified on 3 October 1990. Today, the sovereign state of Germany is a federal parliamentary republic led by a chancellor, it is a great power with a strong economy. As a global leader in several industrial and technological sectors, it is both the world's third-largest exporter and importer of goods; as a developed country with a high standard of living, it upholds a social security and universal health care system, environmental protection, a tuition-free university education. The Federal Republic of Germany was a founding member of the European Economic Community in 1957 and the European Union in 1993, it is part of the Schengen Area and became a co-founder of the Eurozone in 1999. Germany is a member of the United Nations, NATO, the G7, the G20, the OECD. Known for its rich cultural history, Germany has been continuously the home of influential and successful artists, musicians, film people, entrepreneurs, scientists and inventors.
Germany has a large number of World Heritage sites and is among the top tourism destinations in the world. The English word Germany derives from the Latin Germania, which came into use after Julius Caesar adopted it for the peoples east of the Rhine; the German term Deutschland diutisciu land is derived from deutsch, descended from Old High German diutisc "popular" used to distinguish the language of the common people from Latin and its Romance descendants. This in turn descends from Proto-Germanic *þiudiskaz "popular", derived from *þeudō, descended from Proto-Indo-European *tewtéh₂- "people", from which the word Teutons originates; the discovery of the Mauer 1 mandible shows that ancient humans were present in Germany at least 600,000 years ago. The oldest complete hunting weapons found anywhere in the world were discovered in a coal mine in Schöningen between 1994 and 1998 where eight 380,000-year-old wooden javelins of 1.82 to 2.25 m length were unearthed. The Neander Valley was the location where the first non-modern human fossil was discovered.
The Neanderthal 1 fossils are known to be 40,000 years old. Evidence of modern humans dated, has been found in caves in the Swabian Jura near Ulm; the finds included 42,000-year-old bird bone and mammoth ivory flutes which are the oldest musical instruments found, the 40,000-year-old Ice Age Lion Man, the oldest uncontested figurative art discovered, the 35,000-year-old Venus of Hohle Fels, the oldest uncontested human figurative art discovered. The Nebra sky disk is a bronze artefact created during the European Bronze Age attributed to a site near Nebra, Saxony-Anhalt, it is part of UNESCO's Memory of the World Programme. The Germanic tribes are thought to date from the Pre-Roman Iron Age. From southern Scandinavia and north Germany, they expanded south and west from the 1st century BC, coming into contact with the Celtic tribes of Gaul as well
The Deutsche Bundesbank is the central bank of the Federal Republic of Germany and as such part of the European System of Central Banks. Due to its strength and former size, the Bundesbank is the most influential member of the ESCB. Both the Bundesbank and the European Central Bank are located in Germany, it is sometimes referred to as "Buba" for Bundesbank. The Bundesbank was established in 1957 and succeeded the Bank deutscher Länder, which introduced the Deutsche Mark on 20 June 1948; until the euro was physically introduced in 2002, the Bundesbank was the central bank of the former Deutsche Mark. The Bundesbank was the first central bank to be given full independence, leading this form of central bank to be referred to as the Bundesbank model, as opposed, for instance, to the New Zealand model, which has a goal set by the government. Nowadays, the ECB uses the Bundesbank model, making the concept the foundation of the entire Euro system; the Bundesbank was respected for its control of inflation through the second half of the 20th century.
This made the German Mark one of the most respected currencies, the Bundesbank gained substantial indirect influence in many European countries. The history of the Bundesbank is inextricably linked with the history of the German currency after the Second World War. Following the total destruction after the war, the old Reichsmark was worthless, a currency reform was implemented in the western occupation zones including West Berlin: on 21 June 1948, the D-Mark, or Deutsche Mark, replaced the Reichsmark; the currency reform was based on laws enacted by the Allied military government. In preparation, the Western Powers established a new two-tier central bank system in the occupied zones, it comprised the central banks of the states of the West German occupation zones and the Bank deutscher Länder in Frankfurt am Main, created on 1 March 1948. The central banks of the Länder acted as central banks within their areas of jurisdiction; the Bank deutscher Länder, whose share capital was held by the central banks of the Länder, was responsible for issuing bank notes, co-ordinating policy and various central tasks including management of foreign exchange.
The supreme governing body of the two-tier central bank system was the Central Bank Council set up at the Bank deutscher Länder. It consisted of a president, the presidents of the central banks of the Länder and the president of the directorate of the Bank deutscher Länder. Amongst other things, the Central Bank Council determined policy on bank rate and minimum reserve policy, open-market policy guidelines and granting of credit. After the negative experience with a central bank subject to government orders, the principle of an independent central bank was established; the Bank deutscher Länder was independent of German political bodies from the start, including the federal German government, active from September 1949. It achieved independence from the Allies in 1951; the German "Basic Law", which had come into force on 23 May 1949, placed an obligation on the German federal legislature to establish a federal bank responsible for the issue of bank notes and currency. The legislature fulfilled this obligation by passing the Bundesbank Act of 26 July 1957, which abolished the two-tier structure of the central bank system.
The central banks of the Länder were now no longer independent note-issuing banks, but became regional headquarters of the Bundesbank retaining the title "state central bank". The Central Bank Council remained the supreme decision-making body of the Bundesbank, it was now made up of the presidents of the central banks of the Länder and a board of directors based in Frankfurt. The Central Bank Council decided on the currency and credit policy and laid down rules for management; as the central executive body of the Bundesbank, the Directorate was responsible for implementing the decisions of the Central Bank Council. The Directorate ran the bank and was, in particular, responsible for dealings with the federal government and its "special assets", for transactions with credit institutes operating in the Federal republic of Germany, for currency transactions, foreign commercial transactions, for open-market dealings; the Directorate was made up of the president and the vice-president of the Bundesbank and up to six additional members.
The central banks of the Länder carried out business falling in their areas independently. The Bundesbank Act explicitly made them responsible for dealings with public bodies and credit institutes; the central Banks of the Länder controlled the subsidiary bodies, now called branches. Overall management of each Land central bank was in the hands of its executive board, which as a rule consisted of the president and the vice-president of the bank. In the wake of the Fall of the Berlin Wall, the Federal Republic of Germany and the German Democratic Republic signed a treaty on 18 May 1990, that created an economic and currency union between the two German nations; the Bundesbank was made responsible for money and currency policy within the whole of the currency union. A "Provisional Administration Body" was set up for the purpose of implementing the treaty, this body continued to operate beyond the official date of reunification until 31 October 1990. T