In World War II, the costs of the war were also financed by government loans from the central bank. This time, however, attempts were made to prevent the strong expansion of the money supply. Goods rationing, price and wage freezes and a system of ration coupons made inflation almost invisible. Thus, inflation in Germany was concealed. After the end of World War II, an-other currency reform followed in 1948. Reichsmarks were exchanged for Deutschmarks at a ratio of 10:1. And again, 90% of the debts, but also 90% of financial assets had disappeared. These two inflations left a traumatic mark on the German minds.
As a result of these inflation experiences in Germany, a Bundesbank was created, which, as a body independent of the state, was primarily committed to monetary stability. The intention was to decouple monetary policy from state influence as far as possible, which worked very well until the 2000s.
The Bundesbank served as a successful model for the introduction of the euro system. According to the rules of the euro system, price stability prevails if the inflation rate on the basis of the previous year is below, but also close to 2% in the medium term. Thus, in the 20 years since its introduction, the euro has also proved to be a stable currency externally, both in Germany and in the euro area as a whole.
Due to the Corona pandemic, the inflation rate in Germany in 2020, measured by the consumer price index (CPI) compared to 2020, was already 3.1%. In the course of 2021, inflation contin-ued to accelerate and in December 2021 was already +5.3% compared to the same month of the previous year.