ABSTRACT
This chapter provides an overview of the economic and monetary union in Germany. It looks at the state of the economy in the eastern sector of Germany, briefly before and in more detail after the economic and monetary union. The chapter reviews some of the effects of the quick transition process on East German citizens. It focuses on the year immediately following German economic and monetary union—from July 1990 to July 1991. The experience of East Germany can be instructive for other states as they attempt to make the transition to a market system. The bargaining position of the German Democratic Republic was considerably weakened by economic conditions in the country, the continuing exodus of workers to the West, and the strength of Kohl in both west and east Germany. The monetary union provided for the conversion of the nontransferable East German ostmark to the strong West German deutsche mark, which is freely convertible in world markets.
