Bundesbank-government relations in Germany in the 1990s: from GEMU to EMU

The Bundesbank's widely-discussed independence ascribes it only discretionary power in the realm of monetary policy, but its influence can extend into other areas of economic policy. Since the government retains the initiative in these policy realms, the Bundesbank's influence consists of being able to mold the form rather than the direction of government policy. To exercise this influence, however, the Bundesbank must have public opinion on its side. An examination of the government-Bundesbank relationship as it touched upon the cases of Economic and Monetary Union in Germany (1990) and Europe (1990-98) reveals the extent and limitations of the Bundesbank's influence over economic policy. It concludes by exploring the consequences of these findings on the influence of the European Central Bank (ECB).