The Internal Foreign Exchange Rate Regime
Another key task of the State Bank (on which it expended considerable resources) was attempting to control the circulation of foreign exchange within the G.D.R. This was primarily because of concerns that the circulation of foreign exchange (particularly the Deutschmark) could lead to the establishment of a parallel currency that would encourage the black market, damage the East German Mark and the internal economy, and undermine the international prestige of the G.D.R. on its own soil.
Thus citizens of the GDR who were in the possession of foreign exchange (typically Deutschmarks sent by Western relatives or, for a small minority such as writers and artists, overseas royalties earnings) were obliged to deposit this in a dedicated foreign exchange account with the state bank. In order to encourage compliance, and thereby help “drain” the circulation of foreign currency from the economy, these accounts carried a 1% interest rate premium over the nationally determined fixed interest of 3.25% per annum paid on all other consumer saving accounts.
However, although the interest rate on these accounts was 4.25% per annum, access to the hard currency in the account was far from easy. Technically the foreign currency on deposit was only available for use during authorised travel to Western countries, and was limited to the legitimate foreign currency travel expenses in the country concerned, plus the equivalent of 15.00 Deutschmarks per day for other expenses. As the G.D.R. only granted visas to travel to the West in limited circumstances to those below pensionable age (e.g. for weddings, funerals and serious illness of close relatives, business based attendance at international conferences and trade fairs), and then usually only for very short periods, this effectively “neutralised” the foreign exchange held in the accounts of all those under 65 years old and limited the usefulness of larger sums to those aged 65 and older.
Read more about this topic: Staatsbank
Famous quotes containing the words internal, foreign, exchange, rate and/or regime:
“The internal effects of a mutable policy ... poisons the blessings of liberty itself.”
—James Madison (1751–1836)
“I have been told lately that Fuseli was travelling by coach and a gentleman opposite him said: “I understand, Mr. Fuseli, that you are a painter; it may interest you to know that I have a daughter who paints on velvet.”
Fuseli rose instantly and said in a strong foreign accent, “Let me get out.””
—Samuel Butler (1835–1902)
“Development, it turns out, occurs through this process of progressively more complex exchange between a child and somebody else—especially somebody who’s crazy about that child.”
—Urie Bronfenbrenner (b. 1917)
“This is the essential distinction—even opposition—between the painting and the film: the painting is composed subjectively, the film objectively. However highly we rate the function of the scenario writer—in actual practice it is rated very low—we must recognize that the film is not transposed directly and freely from the mind by means of a docile medium like paint, but must be cut piece-meal out of the lumbering material of the actual visible world.”
—Sir Herbert Read (1893–1968)
“I always draw a parallel between oppression by the regime and oppression by men. To me it is just the same. I always challenge men on why they react to oppression by the regime, but then they do exactly the same things to women that they criticize the regime for.”
—Sethembile N., South African black anti-apartheid activist. As quoted in Lives of Courage, ch. 19, by Diana E. H. Russell (1989)