Germany

There has been substantial development in Germany’s attitude to and standing in international financial markets in recent years. This has resulted from several factors. First, the country’s great economic success over the entire post-war period and the strength of its balance of payments have led to a need to facilitate capital exports as a means of balancing the balance of payments and thus reducing excess upward pressure on the exchange rate. Second, the-appreciation of the exchange rate has led to reduced profitability for manufacturing in Germany itself and hence much greater direct investment abroad by German companies. Third, the economic strength of Germany has facilitated growing strength among the German banks, whose position in the table of the world’s leading banks ranked by assets has increased steadily over the years. These banks have been keen to increase their business opportunities, and the institutional structure of the German capital market has made it easier for them to arrange foreign placings in the long-term markets. They have also been willing to facilitate the increasing international use of the deutschemark in bank credits. The minimum reserve requirements in Germany and other banking regulations have encouraged the establishment of a very substantial euro-deutschemark market, which is largely based in Luxembourg.