Chapter

FEDERAL REPUBLIC OF GERMANY

Author(s):
International Monetary Fund
Published Date:
August 2003
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Publication of Statutes and Regulations

Federal laws are published in the Bundesgesetzblatt (Federal Law Gazette), which is divided into three parts: Part I contains the texts of laws and ordinances; Part II contains the texts of treaties, international agreements, and related measures; Part III sets forth the consolidated texts of the laws in force, systematically arranged by subject matter. The Bundesanzeiger (Federal Journal or Advertiser) contains other measures (Rechtsvorschriften) of general interest. A consolidated index, Fundstellen der Bundesgesetzgebung (Sources of Federal Law) is published as a supplement (Beilage) to Part I of the Bundesgesetzblatt. This index covers the laws and ordinances published in the Bundesgesetzblatt and the measures published in the Bundesanzeiger.

For a listing of unofficial loose-leaf collections of laws relating to banking and negotiable instruments, see the Bibliographical Note, pp. 298 and 299, below.

The Law Concerning the Deutsche Bundesbank, 19571

Note:—The Deutsche Bundesbank (German Federal Bank) is governed by the Law Concerning the Deutsche Bundesbank of July 26, 1957. This Law supersedes the pre-existing central bank regime, which was based primarily on the Law for the Establishment of a Bank deutscher Länder (Bank of the German States) of February 18, 1948.2

Section I.—Establishment, Legal Form and Functions

Art. 1. Establishment of the Deutsche Bundesbank.—The Land Central Banks and the Berlin Central Bank shall be merged with the Bank deutscher Länder. The Bank deutscher Länder shall become the Deutsche Bundesbank.3

Art. 2. Legal form, original capital and seat.—The Deutsche Bundesbank shall be an autonomous Federal institution and a legal person under public law. Its original capital of two hundred and ninety million deutsche mark shall be the property of the Federation. The Bank shall have its seat at the seat of the Federal Government; so long as this is not in Berlin, the seat of the Bank shall be in Frankfurt am Main.

Art. 3. Functions.—The Deutsche Bundesbank, making use of the powers in the field of monetary policy4 conferred upon it under this Law, shall regulate the note and coin circulation and the supply of credit to the economy with the aim of safeguarding the currency and shall ensure appropriate payments through banks within the country as well as to and from foreign countries.

Art. 4. Participations.—The Deutsche Bundesbank shall be authorized to participate in the Bank for International Settlements and, subject to the approval of the Federal Government, in other institutions serving the purposes of a supranational currency policy4 or facilitating international payments and credit transactions or otherwise useful to the Bundesbank in discharging its functions.

Section II.—Organization

Art. 5. Organs of the Deutsche Bundesbank.—The organs of the Deutsche Bundesbank shall be the Central Bank Council [Zentralbankrat] (Article 6), the Directorate [Direktorium] (Article 7), and the Boards of Management [Vorstände] of the Land Central Banks (Article 8).

Art. 6. The Central Bank Council.—(1) The Central Bank Council shall determine the monetary and credit policies of the Bank. It shall lay down general directives for the conduct of business and administration and shall delimit the responsibilities of the Directorate and of the Boards of Management of the Land Central Banks in accordance with the provisions of this Law. The Council may also, in individual cases, issue instructions to the Directorate and to the Boards of Management of the Land Central Banks.

(2) The Central Bank Council shall consist of the President and the Vice-President of the Deutsche Bundesbank, the other members of the Directorate, and the Presidents of the Land Central Banks.

(3) The Central Bank Council shall meet under the chairmanship of the President or the Vice-President of the Deutsche Bundesbank. It shall take its decisions by a simple majority of the votes cast. The By-Laws shall lay down any other conditions governing the taking of decisions. The By-Laws may provide that members of the Central Bank Council who are prevented from attending meetings for a prolonged period shall be represented by deputies.

Art. 7. Directorate.—(1) The Directorate shall be responsible for the implementation of the decisions taken by the Central Bank Council. It shall manage and administer the Bank, except in matters coming within the competence of the Boards of Management of the Land Central Banks. More particularly, the following business shall be reserved for the Directorate:

  • transactions with the Federation and its Special Funds;
  • transactions with credit institutions which have central functions for the whole of the Federal territory;
  • foreign exchange transactions and transactions with foreign countries;
  • open market transactions.

(2) The Directorate shall consist of the President and the Vice-President of the Deutsche Bundesbank and of not more than eight further members. The members of the Directorate must possess special professional qualifications.

(3) The President and the Vice-President as well as the other members of the Directorate shall be appointed by the President of the Federal Republic on the proposal of the Federal Government. The Federal Government shall consult the Central Bank Council before making its proposals. The members shall be appointed for eight years, or in exceptional cases for a shorter period, but not less than two years. All appointments and retirements shall be published in the Bundesanzeiger.

(4) The members of the Directorate shall hold office under public law. Their status in relation to the Bank, in particular regarding salaries, pensions, and surviving dependents’ allowances, shall be regulated by contracts concluded with the Central Bank Council. Such contracts shall be subject to the approval of the Federal Government.

(5) The Directorate shall meet under the chairmanship of the President or the Vice-President of the Deutsche Bundesbank. It shall take its decisions by a simple majority of the votes cast. In the event of a tie, the chairman shall have the casting vote. The By-Laws shall lay down any other conditions governing the taking of decisions. The By-Laws may provide that specific decisions require a unanimous vote or some other majority of votes.

Art. 8. Land Central Banks.—(1) The Deutsche Bundesbank shall maintain a Main Office in each Land. The Main Offices shall be designated as the “Landeszentralbank in Baden-Württemberg, in Bayern, in Berlin, in Bremen, in der Freien und Hansestadt Hamburg, in Hessen, in Niedersachsen, in Nordrhein-Westfalen, in Rheinland-Pfalz, im Saarland, in Schleswig-Holstein,” respectively.

(2) The Board of Management of each Land Central Bank shall conduct all transactions and administrative business within the area for which the Main Office concerned is competent. More particularly, the following business shall be reserved to the Land Central Banks:

  • transactions with the Land and with public administrations in the Land;
  • transactions with credit institutions within their area of competence, except such transactions as are reserved to the Directorate under Article 7(1), item 2.

(3) The Board of Management of each Land Central Bank shall consist of the President and the Vice-President. The By-Laws may permit the appointment of one or two additional members of the Board of Management and may lay down regulations governing the taking of decisions by Boards of Management. The members of the Boards of Management must possess special professional qualifications.

(4) The Presidents of the Land Central Banks shall be appointed by the President of the Federal Republic on the proposal of the Bundesrat. The Bundesrat shall make its proposals on the basis of a recommendation of the authority competent under Land legislation, and after consulting the Central Bank Council. The Vice-Presidents and the other members of the Boards of Management shall be appointed by the President of the Deutsche Bundesbank on the proposal of the Central Bank Council. The members of the Boards of Management shall be appointed for eight years, or in exceptional cases for a shorter period, but not less than two years. All appointments to and terminations of office shall be published in the Bundesanzeiger.

(5) The members of the Board of Management shall hold office under public law. Their status in relation to the Bank, in particular regarding salaries, pensions and surviving dependents’ allowances, shall be regulated by contracts concluded with the Central Bank Council. Such contracts shall be subject to the approval of the Federal Government.

Art. 9. Advisory Boards at the Land Central Banks.—(1) At each Land Central Bank there shall be an Advisory Board which shall consult with the President of the Land Central Bank on questions of monetary and credit policies, and with the Board of Management of the Land Central Bank on the execution of the tasks incumbent on the latter within its area.

(2) The Advisory Board shall consist of not more than ten members who should be specially familiar with credit matters. Not more than half of the members should be chosen from the various branches of the credit business, and the other members from industry, commerce and agriculture and from among wage earners and salaried employees.

(3) The members of the Advisory Board shall be appointed for a period of three years by the President of the Deutsche Bundesbank on the proposal of the respective Land Government and after consulting the Board of Management of the Land Central Bank concerned.

(4) The President of the Land Central Bank or his deputy shall act as chairman at meetings of the Advisory Board. The appropriate Land Ministers shall be afforded the opportunity of attending meetings of the Advisory Board. They may require a meeting of the Advisory Board to be convened. In all other respects the proceedings of the Advisory Board shall be regulated by the By-Laws.

Art. 10. Branch establishments.—The Deutsche Bundesbank shall be authorized to maintain branch establishments (Main Branches and Branches). Each Main Branch shall be directed by two managers who shall be responsible to the appropriate Land Central Bank. Each Branch shall be directed by one manager who shall be responsible to the appropriate Main Branch.

Art. 11. Representation.—(1) The Deutsche Bundesbank shall be represented in and out of court by the Directorate; in the area of competence of a Land Central Bank, it shall also be represented by the latter’s Board of Management, and within the area of a Main Branch, also by the managers thereof. Article 31(2) and Article 41(4) shall not be affected by this provision.

(2) Declarations of intent shall commit the Deutsche Bundesbank if made by two members of the Directorate or of the Board of Management of a Land Central Bank or by two managers of a Main Branch. Such declarations may also be made by authorized representatives appointed by the Directorate or, in the area of competence of a Land Central Bank, by the latter’s Board of Management. A declaration of intent to be made to the Bank shall be legally effective if made to any one person authorized to represent the Bank.

(3) Authority to represent the Bank may be proved by a certification signed by a notarial official of the Deutsche Bundesbank.

(4) Actions against the Deutsche Bundesbank which relate to the business of a Land Central Bank or of a Main Branch may also be brought at the Court having jurisdiction in respect of the seat of the Land Central Bank or the Main Branch concerned.

Section III.—Federal Government and Bundesbank

Art. 12. The Bank’s relationship to the Federal Government.—The Deutsche Bundesbank shall be obliged insofar as is consistent with its functions, to support the general economic policy of the Federal Government. In the exercise of the powers conferred on it under this Law it shall not be subject to instructions from the Federal Government.

Art. 13. Cooperation.—(1) The Deutsche Bundesbank shall advise the Federal Government on matters of primary importance in the field of monetary policy and shall upon request furnish information to the Federal Government.

(2) The members of the Federal Government shall be entitled to take part in the deliberations of the Central Bank Council. They shall have no vote, but may make motions. At their request the taking of a decision shall be deferred, but for not more than two weeks.

(3) The Federal Government shall invite the President of the Deutsche Bundesbank to participate in its deliberations on matters of importance in the field of monetary policy.

Section IV.—Powers in the Field of Monetary Policy

Art. 14. Note issue.—(1) The Deutsche Bundesbank shall have the exclusive right to issue bank notes in the area to which this Law applies. Its notes shall be expressed in deutsche mark. They shall be the sole unlimited legal tender. Notes for amounts of less than ten deutsche mark may only be issued in agreement with the Federal Government. The Deutsche Bundesbank shall give public notice of the denominations and distinguishing characteristics of the notes which it issues.

(2) The Deutsche Bundesbank may call in notes for withdrawal. Notes called in shall cease to be legal tender upon expiry of the period for exchange fixed in the notice of call.

(3) The Deutsche Bundesbank shall not be under any obligation to replace notes destroyed, lost, forged or falsified, or having ceased to be legal tender. The Bank shall replace mutilated notes if the holder either presents fragments of a note which taken together are larger than half the note or submits proof that the remainder of the note of which he presents only one half or a smaller portion has been destroyed.

Art. 15. Discount, credit, and open market policies.—For the purpose of influencing the circulation of money and the supply of credit, the Deutsche Bundesbank shall from time to time fix the interest and discount rates to be applied to its transactions and shall determine the principles governing its credit and open market operations.

Art. 16. Minimum reserve policy.—(1) For the purpose of influencing the circulation of money and the supply of credit, the Deutsche Bundesbank may require the credit institutions to maintain with it, on giro account, balances (minimum reserve) equal to a specified percentage of their liabilities arising from sight, time and savings deposits and from short-and medium-term borrowings, with the exception of liabilities to other credit institutions required to maintain minimum reserves. The rates fixed by the Bank shall not exceed thirty per cent for sight liabilities, twenty per cent for time liabilities, and ten per cent for savings deposits. Within these limits the Bank may fix the rates at various levels in accordance with general principles, in particular for individual groups of institutions, and may exclude certain liabilities from the computation. In the case of a credit institution as defined in Article 53 of the Banking Law, a net liability on intercompany account shall likewise be deemed to be a liability in respect of sight deposits within the meaning of sentence 1.

(2) The average monthly balance of a credit institution with the Deutsche Bundesbank (actual reserve) must not be less than the percentages, fixed in accordance with paragraph (1), of the monthly average of that institution’s liabilities subject to the reserve requirement (required reserve). The Bank shall issue detailed regulations concerning the computation and establishment of the actual reserve and of the required reserve.

(3) On the amount by which the actual reserve falls short of the required reserve the Deutsche Bundesbank may charge a special interest rate of up to three per cent above the current rate for advances against securities. The special interest rate will not be charged where the shortfall was due to unforeseeable circumstances and thus unavoidable, or where the credit institution concerned has gone into liquidation. The Deutsche Bundesbank shall report any substantial or repeated shortfall to the Bank Supervisory Authority.

(4) Agricultural credit cooperatives which are members of a regional central institution and maintain no giro account with the Deutsche Bundesbank may keep their minimum reserves with their central institution; the latter shall maintain balances in an equal amount at the Deutsche Bundesbank.

(5) The minimum reserves to be maintained under this Law shall be counted toward the liquidity reserves to be maintained under other laws.5

Art. 17. Directive governing deposits.—The Federation, the Equalization of Burdens Fund, the European Recovery Program Special Fund and the Länder shall deposit their liquid funds, including cash resources earmarked for special purposes in the budget, with the Deutsche Bundesbank on giro account. Deposit or investment in any other manner shall require the approval of the Bundesbank, which shall, however, give due consideration to the interest which the Länder have in maintaining their State and Land Banks.

Art. 18. Statistical reporting.—For the purpose of discharging its functions, the Deutsche Bundesbank shall be authorized to instruct all credit institutions to prepare statistics on banking and monetary matters for collection by the Bundesbank. Articles 7, 10 and 12(1) of the Law on Statistics for Federal Purposes shall be applicable as appropriate. The Deutsche Bundesbank may publish the results of the statistics for general purposes. Such publications must not contain any individual data. Persons entitled under Article 13(1) to receive information may be given individual data only if and insofar as this is provided for in the instructions regarding statistics.

Section V.—Sphere of Operations

Art. 19. Transactions with credit institutions.—(1) The Deutsche Bundesbank may engage in the following transactions with credit institutions in the area to which this Law applies:

  • Purchase and sell bills of exchange and checks backed by three parties known to be solvent; the third signature may be dispensed with if the security of the bill or check is guaranteed in some other way; the bills must be payable within three months from the date of purchase; they should be good commercial bills.
  • Purchase and sell Treasury bills issued by the Federation, by one of the Federal Special Funds specified in Article 20(1), item 1, or by a Land, and payable within three months from the date of purchase.
  • Grant interest-bearing loans against collateral (advances on securities) for a period not exceeding three months; such loans may be granted against:
    • (a) bills of exchange meeting the requirements stated in item 1, up to a maximum of nine tenths of their nominal value,
    • (b) Treasury bills meeting the requirements stated in item 2, up to a maximum of nine tenths of their nominal value,
    • (c) non-interest-bearing Treasury bonds maturing within one year from the date of the loans, up to a maximum of three fourths of their nominal value,
    • (d) fixed-interest-bearing bonds and claims on the Federal Debt Register [Schuldbuchforderungen] issued or payable by the Federation, by any of the Federal Special Funds or by a Land, up to a maximum of three fourths of their quoted value,
    • (e) other fixed-interest-bearing bonds and claims on the Federal Debt Register specified by the Bank, up to a maximum of three fourths of their quoted value,
    • (f) equalization claims [Ausgleichsforderungen] entered in the Federal Debt Register in accordance with Article 1 of the Law on the Redemption of Equalization Claims, up to a maximum of three fourths of their nominal value.
    If there is no stock exchange quotation for any one of the securities referred to under (d) and (e), the Bank shall value that security according to the possibilities of realization. In the event of default of a debtor under an advance on securities, the Bank shall be authorized to put the pledge up to auction through one of its own officials or through an official authorized to hold auctions, or, if the object pledged has a stock exchange or market price, to sell it at the current price through one of these officials or through a broker and to reimburse itself out of the proceeds for costs, interest and principal; the Bank shall retain this right even against other creditors and against the estate of a debtor in bankruptcy.
  • Accept non-interest-bearing giro deposits.
  • Accept objects of value, in particular securities, for safe custody and administration; the Bank may not exercise any voting rights attaching to the securities held in safe custody or administered by it.
  • Receive checks, bills of exchange, payment orders, securities and interest coupons for collection, and after collection effect payment of the proceeds, unless the Bank should rule otherwise regarding the crediting of the proceeds in the case of checks and payment orders.
  • Transact other banking operations in accordance with instructions received, subject to cover being provided.
  • Purchase and sell means of payment expressed in foreign currency, including bills of exchange and checks, claims and securities, as well as gold, silver and platinum.
  • Transact any banking business with foreign countries.

(2) As regards the transactions specified in paragraph (1), items 1 to 3, the Bundesbank shall apply its discount rates and its rates for advances on securities.

Art. 20. Transactions with public entities.—(1) The Deutsche Bundesbank may engage in the following transactions with public entities:

  • Grant short-term credits in the form of book and Treasury bill credits (cash advances) to the Federation, to the Federal Special Funds as listed below, and to the Länder. The maximum limit of the cash advances including such Treasury bills as the Deutsche Bundesbank has purchased for its own account or to the purchase of which it has committed itself shall amount:
    • (a) in the case of the Federation, to three thousand million deutsche mark,
    • (b) in the case of the Federal Railways, to four hundred million deutsche mark,
    • (c) in the case of the Federal Postal Administration, to two hundred million deutsche mark,
    • (d) in the case of the Equalization of Burdens Fund, to two hundred million deutsche mark,
    • (e) in the case of the European Recovery Program Special Fund, to fifty million deutsche mark,
    • (f) in the case of the Länder, to twenty deutsche mark per inhabitant according to the latest official census; for Land Berlin and for the Free and Hanseatic Cities of Bremen and Hamburg, an amount of forty deutsche mark per inhabitant shall be used as the basis of computation.
  • Grant credits to the Federation for the meeting of its commitments as a member of the following institutions:
    • (a) the International Monetary Fund, up to four thousand eight hundred and seventy million deutsche mark,
    • (b) the European Fund, up to two hundred and ten million deutsche mark,
    • (c) the International Bank for Reconstruction and Development, up to thirty-five million deutsche mark.
  • Effect the transactions described in Article 19(1), items 4 to 9, with the Federation, the Federal Special Funds, the Länder and other public entities; for these transactions the Bank may not charge the public entities listed in item 1, above, any expenses or fees.

(2) The public entities listed in paragraph (1), item 1, should issue loans, Treasury bonds and Treasury bills preferably through the Deutsche Bundesbank; failing this, such issues shall be effected in consultation with the Deutsche Bundesbank.

Art. 21. Open market operations.—The Deutsche Bundesbank may, for the purpose of regulating the money market, purchase and sell on the open market at market prices:

  • bills of exchange meeting the requirements of Article 19(1), item 1;
  • Treasury bills and Treasury bonds issued by the Federation, by one of the Federal Special Funds as listed in Article 20(1), item 1, or by a Land;
  • bonds and claims on the Federal Debt Register [Schuldbuchforderungen], provided that the debtors are the institutions listed under item 2;
  • other bonds admitted to official stock exchange dealings.

Art. 22. Dealings with the public.—The Deutsche Bundesbank may effect the transactions specified in Article 19(1), items 4 to 9, with physical and legal persons within the country and abroad.

Art. 23. Certification of checks.—(1) The Deutsche Bundesbank may certify checks drawn on it only after cover has been provided. The Bank, through certification, assumes an obligation to the holder to pay the check; it also becomes liable to the drawer and the endorsers for payment.

(2) Payment of a certified check may not be refused even if in the meantime bankruptcy proceedings have been instituted against the drawer.

(3) The liability arising out of the certification shall lapse if the check is not presented for payment within eight days after issue. As regards proof of presentation, Article 40 of the Check Law shall apply.

(4) The claim arising out of the certification shall lapse two years after expiry of the period for presentation.

(5) The regulations regarding jurisdiction and procedure in the matter of bills of exchange shall apply mutatis mutandis to the legal enforcement of claims arising out of certification.

Art. 24. Lending against and purchase of equalization claims.—(1) Notwithstanding the limitations set out in Article 19(1), item 3, the Deutsche Bundesbank may grant loans to credit institutions, insurance companies and building and loan associations against the pledging of equalization claims within the meaning of Article 1 of the Law on the Redemption of Equalization Claims, insofar and so long as is necessary for maintaining the solvency of the pledger.

(2) The Deutsche Bundesbank may purchase equalization claims of the type specified in paragraph (1), subject to the provisions of Article 9(1) of the Law on the Redemption of Equalization Claims, insofar and so long as the resources of the Purchase Fund are not sufficient for this purpose.

Art. 25. Other transactions.—The Deutsche Bundesbank should effect transactions other than those authorized in Articles 19 to 24 only for the purpose of carrying out and winding up authorized transactions, or for internal operational purposes, or for its staff.

Section VI.—Annual Statement, Distribution of Profits and Return

Art. 26. Annual statement.—(1) The business year of the Deutsche Bundesbank shall be the calendar year.

(2) The accounting system of the Deutsche Bundesbank shall conform to the principles of good bookkeeping. The provisions of company law shall be applicable mutatis mutandis to the valuations in the annual balance sheet.

(3) The Directorate shall prepare the annual statement as early as possible. This statement shall be audited by one or more certified auditors appointed by the Central Bank Council in agreement with the Federal Audit Office. The Central Bank Council shall approve the annual statement, which shall then be published by the Directorate.

(4) The auditor’s report shall serve as a basis for the audit to be carried out by the Federal Audit Office. The auditor’s report as well as the findings of the Federal Audit Office thereon shall be communicated to the Federal Minister of Economics and the Federal Minister of Finance.

Art. 27. Distribution of profits.—The net profit shall be applied in the following order:

  • Twenty per cent of the profit or twenty million deutsche mark, whichever is the higher, shall be transferred to a legal reserve until the latter amounts to five per cent of the note circulation; the legal reserve may only be used to offset depreciation and to cover other losses; the fact that other reserves may be available for such purposes shall not preclude the use of the legal reserve.
  • Up to ten per cent of the then remaining part of the net profit may be used to constitute other reserves; the total of these reserves must not exceed the amount of the original capital.
  • Forty million deutsche mark, or thirty million deutsche mark from the business year 1980 onward, shall be transferred to the fund constituted under the Law on the Redemption of Equalization Claims for the purpose of purchasing equalization claims until that fund is wound up.
  • The remaining amount shall be transferred to the Federation.

Art. 28. Return.—The Deutsche Bundesbank shall publish a return showing the financial position on the seventh, fifteenth, twenty-third and last day of each month and containing the following particulars:

I. Assets

  • Gold
  • Balances at foreign banks and money-market investments abroad
  • Foreign notes and coin, foreign bills and foreign checks
  • Domestic bills of exchange
  • Claims secured by collateral
  • Cash advances to
  • (a) the Federation and the Federal Special Funds
  • (b) the Länder
  • Treasury bills and non-interest-bearing Treasury bonds
  • (a) of the Federation and of the Federal Special Funds
  • (b) of the Länder
  • Securities
  • Subsidiary coin
  • Postal check account balances
  • Equalization claims
  • Other assets

II. Liabilities

  • Bank notes in circulation
  • Deposits of
  • 1. Credit institutions
  • 2. Public depositors
    • (a) Federation and Federal Special Funds
    • (b) Länder
    • (c) other public depositors
  • 3. Other domestic depositors
  • 4. Foreign depositors
  • Liabilities in respect of foreign business
  • Reserves for specific purposes
  • Original capital
  • Reserves
  • Other liabilities

Section VII.—General Provisions

Art. 29. Special status of the Deutsche Bundesbank.—(1) The Central Bank Council and the Directorate of the Deutsche Bundesbank shall have the status of the highest Federal authorities. The Land Central Banks and Main Branches shall have the status of Federal authorities.

(2) The Deutsche Bundesbank and its employees shall enjoy the privileges accorded to the Federation and its employees in building, housing and rent matters.

(3) The provisions of the Commercial Code regarding entries in the Trade Register as well as the provisions relating to membership in the Chambers of Industry and Commerce shall not apply to the Deutsche Bundesbank.

Art. 30. Notarial officials.—The President of the Deutsche Bundesbank may appoint notarial officials for the purposes of Article 11(3). They must be qualified to hold the office of judge.

Art. 31. Status of the officials, salaried employees and wage earners of the Deutsche Bundesbank.—(1) The Deutsche Bundesbank shall employ officials, salaried employees and wage earners.

(2) The President of the Deutsche Bundesbank shall appoint the officials of the Bank, but those in the higher echelons on the proposal of the Central Bank Council. He may delegate this authority, as regards officials of the executive, clerical and sub-clerical classes, to the Presidents of the Land Central Banks. The President of the Deutsche Bundesbank shall be the supreme administrative organ and in that capacity shall represent the Bank both in and out of court. He may impose any disciplinary penalties, except where disciplinary courts are competent, and shall be the authority empowered to institute formal disciplinary proceedings (Article 29 of the Federal Disciplinary Code).

(3) The officials of the Deutsche Bundesbank shall be intermediate Federal civil servants [mittelbare Bundesbeamte]. Unless otherwise provided in this Law, the regulations generally applicable to Federal civil servants shall apply to the said officials. The entry into force of this Law shall, in respect of such officials, be substituted for the entry into force of the Federal Civil Service Law.

(4) Subject to the approval of the Federal Government the Central Bank Council shall be authorized to regulate the status of the officials and salaried employees of the Deutsche Bundesbank in Staff Regulations to the extent that is necessary for the orderly and efficient conduct of the Bank’s business. The Staff Regulations may only provide that:

  • The following provisions of Federal civil service law be modified in respect of officials of the Bank:
    • (a) Articles 21, sentence 2, 24, sentence 3, 26(1), 30(2), 66(1), items 2 and 5, and 116(1), item 3, of the Federal Civil Service Law;
    • (b) Article 15 of the Salary Law of December 16, 1927 (Reichsgesetzblatt, Part I, page 349) in the text valid for the Federal Republic, to the extent that the Bundesbank grants revocable, nonpensionable allowances not exceeding thirty per cent of the basic salary, refunds expenditure incurred for official purposes, and pays bonuses for special services;
    • (c) the provisions relating to the granting of subsistence allowances for civil servants in preparatory service.
  • The officials and salaried employees of the Bank shall be required to notify the Bank of any business or professional activities carried on by their spouses.
  • The salaried employees of the Bank
    • (a) shall, in the same manner as the officials of the Bank, require prior approval before they can engage in one of the part-time activities specified in Article 66(1), items 2 and 5, of the Federal Civil Service Law;
    • (b) shall receive the emoluments specified in item 1 (b) above.

(5) The bonuses for special services and the refunds of expenditure incurred for official purposes, referred to in paragraph (4), item 1(b), shall not exceed in the aggregate one twentieth of total expenditure on salaries of officials and salaried employees of the Deutsche Bundesbank.

(6) The Central Bank Council shall, with the approval of the Federal Government, issue regulations relating to the training and careers of the officials of the Deutsche Bundesbank. In so doing it may deviate from the provisions of Federal civil service law regarding the length of the preparatory service and probationary periods and regarding the length of the trial period for promotion within the executive class and for admission to the administrative class.

Art. 32. Duty of secrecy.—All persons in the service of the Deutsche Bundesbank shall be pledged to secrecy regarding the affairs, organization and transactions of the Bank. Even after they have left the service of the Bank they may not, without permission, make depositions or statements in or out of court regarding such of the matters mentioned above as have come to their knowledge during their service with the Bank. Such permission shall, so far as the interests of the Bank are involved, be given to members of the Central Bank Council by that Council and to other employees of the Bank by the President; for purposes of a court hearing such permission shall only be withheld when the good of the Federation or the general interest so requires.

Art. 33. Public announcements.—The Deutsche Bundesbank shall publish in the Bundesanzeiger its announcements intended for the public, in particular those relating to the calling in of notes and the fixing of interest, discount and minimum reserve rates, as well as instructions regarding statistics.

Art. 34. By-Laws.—The By-Laws of the Deutsche Bundesbank shall be adopted by the Central Bank Council. They shall require the approval of the Federal Government and shall be published in the Bundesanzeiger. This shall also apply to amendments of the By-Laws.6

Section VIII.—Penal and Other Provisions Concerning the Seizure of False Money

Art. 35. Unauthorized issue and use of monetary tokens.—(1) Imprisonment or a fine of unlimited amount, or both, shall be imposed as a penalty on:

  • any person who without authority issues monetary tokens (stamps, coins, notes or other documents that are capable of being used as means of payment instead of the legally authorized coins or bank notes) or non-interest-bearing bearer bonds, even if the value of such tokens or bonds is not expressed in deutsche mark;
  • any person who tenders in payment objects of the kind mentioned in item 1 which have been issued without authority.

(2) The attempt shall be punishable.

(3) If the act described in paragraph (1), item 2, is committed through negligence, a fine shall be imposed.

Art. 36. Seizure of false money and of monetary tokens or bonds issued without authority.—(1) The Deutsche Bundesbank and all credit institutions shall seize any counterfeit or falsified bank notes or coins (false money), any bank notes or coins suspected of being false money, as well as any objects of the kind mentioned in Article 35 and issued without authority. A receipt shall be given to the party concerned.

(2) False money and objects of the kind mentioned in Article 35 shall, together with a report, be sent to the police. Credit institutions shall notify any such action to the Deutsche Bundesbank.

(3) Bank notes or coins suspected of being false money shall be submitted to the Deutsche Bundesbank for examination. If the Bundesbank establishes that the bank notes or coins are false, it shall send the false money, together with a report, to the police and shall notify the credit institution that seized it.

Art. 37. Confiscation.—(1) Objects of the kind mentioned in Article 35 and issued without authority may be confiscated. If it is impossible to prosecute or convict any definite person, confiscation may nevertheless be ordered, provided that all the other relevant conditions exist.

(2) Objects confiscated in accordance with paragraph (1), and false money confiscated by virtue of Article 152 of the Penal Code, shall be held by the Deutsche Bundesbank. They may be destroyed after a period of ten years from the date when the judgment ordering confiscation becomes final if the perpetrator has been discovered, or after a period of twenty years from such date if the perpetrator has not been discovered.

Section IX.—Transitional and Final Provisions

Art. 38. Reorganization of the central banking system.—(1) The assets of the Land Central Banks and the Berlin Central Bank, together with their liabilities, shall be transferred in their entirety to the Bank deutscher Länder upon the entry into force of this Law. No charge shall be made for the amendment of the Land Register. The Land Central Banks and the Berlin Central Bank shall cease to exist without going into liquidation.

(2) With effect from January 1, 1957, the liabilities of the Länder in respect of equalization claims held by the Land Central Banks in accordance with the provisions concerning the Monetary Reform shall be transferred to the Federation, and the liability of Land Berlin in respect of the bonds held by the Federation in accordance with Article 23(2), sentence 2, of the First Law Concerning the Transfer of Budgetary Liabilities and Covering Funds to the Federation in the text of August 21, 1951 (Bundesgesetzblatt, Part I, page 779) shall lapse; in the event of the conversion account of a Land Central Bank being adjusted after the entry into force of this Law, the Federation shall take over all the obligations and rights resulting therefrom. The Bank shall pay fifteen million deutsche mark to Land North Rhine-Westphalia and five million deutsche mark to Land Berlin, together with six per cent interest thereon as from January 1, 1957, out of the balance of profit due to the Federation in accordance with Article 27, item 4. All claims of the Länder arising from the termination of their participation in the Land Central Banks and the Berlin Central Bank shall thereupon be regarded as settled.

(3) The Bank shall refund to the Länder the interest paid by them on equalization claims of the Land Central Banks for the period after January 1, 1957, out of such balance of profit due to the Federation in accordance with Article 27, item 4, as is left after the payments provided for in paragraph (2) have been effected.

(4) The consequences ensuing from Article 2, sentence 2, in conjunction with Article 27 shall have effect as from January 1, 1957. The opening balance sheet of the Deutsche Bundesbank shall be drawn up as of that date, with due regard to the provisions of Article 26.

(5) The notes of the Bank deutscher Länder that are valid at the entry into force of this Law shall remain valid as notes of the Deutsche Bundesbank until they are called in by the Directorate. Unissued notes held in stock may be issued as heretofore.

Art. 39. Transitional regulations for the organs of the Bundesbank.— (1) Pending the appointment of the first President of the Deutsche Bundesbank, his duties shall, insofar as they are determined by Articles 6, 8, 9 and 13, be performed by the President of the former Board of Directors of the Bank deutscher Länder, and in all other respects by the President of the former Board of Managers of the Bank deutscher Länder. The President of the Board of Directors of the Bank deutscher Länder and the President of the Board of Managers of the Bank deutscher Länder shall relinquish their offices upon the appointment of the President of the Deutsche Bundesbank without prejudice to their contractual claims.

(2) Pending the appointment of the first Vice-President of the Deutsche Bundesbank, his duties shall be performed by the Vice-President of the Board of Managers of the Bank deutscher Länder. The Vice-President of the Board of Managers of the Bank deutscher Länder shall relinquish his office upon the appointment of the Vice-President of the Deutsche Bundesbank without prejudice to his contractual claims.

(3) The other members of the former Board of Managers of the Bank deutscher Länder shall remain in office as members of the Directorate of the Deutsche Bundesbank until their contracts expire.

(4) The members of the Boards of Managers of the former Land Central Banks shall remain in office as members of the Boards of Management of the Main Offices of the Deutsche Bundesbank until their contracts expire.

Art. 40. Change in the terms of service.—(1) Upon the entry into force of this Law, the officials, salaried employees and wage earners of the Bank deutscher Länder, of the former Land Central Banks and of the Berlin Central Bank shall become officials, salaried employees and wage earners of the Deutsche Bundesbank. Officials for life or on probation shall be given the status of civil servants for life or on probation in accordance with the Federal Civil Service Law; officials on revocable appointment shall be given the status of civil servants on revocable appointment in accordance with the Federal Civil Service Law, except where, on satisfying the requirement laid down in Article 5(1), item 2, of the Federal Civil Service Law, they are appointed officials on probation; any difference between a higher previous salary and the salary due after the entry into force of this Law shall be compensated by a nonpensionable adjustment allowance payable until compensation has been achieved by salary increases; increases as a result of a change in personal status or of a change in the place of work, as well as general increases in salaries as a result of a change in economic conditions, shall not be taken into account.

(2) In all other respects the provisions of Chapter II, Section III, of the Skeleton Law Concerning the Civil Service shall apply. The pension, however, of a temporarily retired official of the Deutsche Bundesbank may not, for a period of five years, be less than fifty per cent of his pensionable salary, calculated on the basis of the final grade in his salary group. This shall not apply to the calculation of surviving dependents’ allowances.

(3) Upon the entry into force of this Law, officials retired on pension, widows, orphans and other recipients of maintenance from the Bank deutscher Länder, the former Land Central Banks and the Berlin Central Bank shall become recipients of maintenance from the Deutsche Bundesbank. Article 180 of the Federal Civil Service Law shall be applied as appropriate, provided that the entry into force of the present Law shall be substituted for the entry into force of the Federal Civil Service Law. Article 180(4) of the Federal Civil Service Law shall apply to former officials of the Bank deutscher Länder, of the former Land Central Banks and of the Berlin Central Bank, and to their surviving dependents.

(4) Paragraph (3) shall apply mutatis mutandis to officials of the Deutsche Reichsbank who after May 8, 1945 were re-employed at an office of the Deutsche Reichsbank in the territory of the Federal Republic in accordance with their former status and have retired without having first been taken into the service of the Bank deutscher Länder, a former Land Central Bank or the Berlin Central Bank, as well as to their surviving dependents.

(5) Claims under the terms of the Federal Laws Concerning Indemnification of Public Servants for National Socialist Wrong and Concerning Indemnification of Public Servants Living Abroad for National Socialist Wrong, if asserted by persons

  • who have suffered damage within the sphere of the Deutsche Reichsbank, or
  • who, being members or former members of the Bank deutscher Länder, of the former Land Central Banks or of the Berlin Central Bank, satisfy the conditions laid down in Article 22(3) of the Law Concerning Indemnification of Public Servants for National Socialist Wrong,

shall be claims against the Deutsche Bundesbank. This shall not apply in cases under item 1 above if another employer is liable for indemnification in accordance with Article 22(3) of the aforementioned Law.

(6) As regards persons who have, or could have, received maintenance under the Law to Regulate the Status of Persons Coming Within the Provisions of Article 131 of the Basic Law,7 Article 41 of the present Law shall be applicable.

(7) Until the entry into force of the provisions of Article 31(4) and (6), or until the expiry of three years after the entry into force of this Law, whichever period is shorter, the regulations issued by the Board of Directors of the Bank deutscher Länder regarding qualifying training and careers of officials, including the rules relating to examinations, as well as Article 1(3), sentence 1, Articles 3, 4, 5, 8, 9 and Article 10(2) of the Staff Regulations of the Bank deutscher Länder dated November 19, 1954 (Bundesanzeiger, No. 231, December 1, 1954), shall continue to apply; Article 1(3), sentence 1, however, shall apply with the proviso that the President of the Deutsche Bundesbank shall have power of decision only in the cases specified in Article 21, sentence 2, and in Article 24, sentence 3, of the Federal Civil Service Law.

Art. 41. Status of persons coming within the provisions of Article 131 of the Basic Law.—(1) The Deutsche Bundesbank shall be the “appropriate institution,” within the meaning of Article 61 of the Law to Regulate the Status of Persons Coming Within the Provisions of Article 131 of the Basic Law,7 in relation to the Deutsche Reichsbank, the Nationalbank für Böhmen und Mahren and foreign banks of issue (Item 19 of Annex A to Article 2(1) of the aforementioned Law).

(2) Article 62 of the Law referred to in paragraph (1) shall apply mutatis mutandis to officials, salaried employees and wage earners of the Deutsche Reichsbank who were employed in offices of the Deutsche Reichsbank within the territory of the Federal Republic or of Land Berlin on May 8, 1945, and

  • who lost their office or employment for reasons not covered by civil service law or by legislation regarding collective agreements and have not yet been given employment again in accordance with their former status, or
  • who before the entry into force of the Law referred to in paragraph (1) have completed their sixty-fifth year of life or have become incapable of work and who, for reasons not covered by civil service law or by legislation regarding collective agreements, receive no pension, or no appropriate pension.

(3) The assessment basis for retired officials of the Deutsche Reichsbank who retired before September 1, 1953 (Article 5(1), item 1, Article 6(2), Article 35(1) and Article 48 of the Law referred to in paragraph (1)) shall continue to be the same as laid down in the German Civil Service Law valid in the Federal Republic (pensionable salaries, pension rates), subject to the modifications resulting from Articles 7 and 8, Article 29(2) and (3) and Article 31 and Article 35(3) of the Law referred to in paragraph (1), as well as from Article 112, Article 156(1), Article 181(a), and Article 181(b) of the Federal Civil Service Law. The pension shall not exceed seventy-five per cent of the pensionable salary. The same shall apply mutatis mutandis to surviving dependents. Article 64(1), sentence 5, half-sentence 2, of the Law referred to in paragraph (1) shall apply.

(4) The President of the Deutsche Bundesbank shall be the supreme administrative organ for persons to whom the provisions of paragraphs (1) and (2) are applicable. In this respect he shall represent the Bank both in and out of court. Where in cases under paragraph (1) the concurrence of the Federal Minister of Finance is specified in the Law therein referred to and in the civil service legislation to be applied in accordance therewith, he shall act in lieu of the Minister.

Art. 42. Mobilization of the equalization claim for open market operations.—(1) The Federation, as the debtor in respect of the equalization claim which the Deutsche Bundesbank holds in accordance with the provisions concerning the Monetary Reform, shall hand over to the Bank, upon the latter’s request, Treasury bills or non-interest-bearing Treasury bonds in denominations and on terms of the Bank’s choice (“mobilization paper”) up to a maximum of four thousand million deutsche mark. On the request of the Bank, the Federal Government may increase the maximum to the nominal amount of the total equalization claim.

(2) Such mobilization paper shall be payable at the Deutsche Bundesbank. The Bank shall be under an obligation to the Federation to meet all liabilities arising from such mobilization paper. The Federation shall continue to pay the interest on the entire equalization claim.

(3) The Federal Minister of Finance shall be empowered to issue such mobilization paper up to the maximum amount permissible under paragraph (1). Mobilization paper shall not be counted toward the credit ceiling referred to in Article 20(1), item (a).

Art. 43. Repeal and amendment of legal provisions.—(1) The following legal provisions shall be repealed:

  • the Law on the Establishment of a Bank deutscher Länder, with the exception of paragraph 15(c) thereof,8
  • the Law Concerning the Land Central Banks,
  • the Issue Law,
  • Article 11(3) and Article 24(4) of the Conversion Law.

(2) The following legal provisions shall be amended:

  • Article 11(3) of Regulation No. 2 under the Conversion Law and Article 11(4) of Regulation No. 23 under the Conversion Law shall read as follows:“The sale of an equalization claim before its entry in the Debt Register shall not be permissible.”
  • Article 3(4) of Regulation No. 33 under the Conversion Law shall read as follows:“(4) Article 11(4) of the Conversion Law and Article 11 of Regulation No. 2 Implementing Ordinance under the Conversion Law shall be applicable mutatis mutandis to equalization claims; financial institutions, insurance companies and building and loan associations may, under the same conditions, purchase equalization claims or accept them as security for loans.”
  • Article 35(3) of the Supplementary Conversion Law of September 21, 1953 (Bundesgesetzblatt, Part I, page 1439) shall read as follows:“(3) Article 11(4) of the Conversion Law and Article 11(3) of Regulation No. 2 under the Conversion Law shall be applicable to equalization claims.”
  • In Article 7(1), item 5, of the Law on the Reconstruction Loan Corporation in the text of January 22, 1952 (Bundesgesetzblatt, Part I, page 65) the words “by the Board of Directors of the Bank deutscher Länder” shall be replaced by the words “by the Federal Government.”

Art. 44. Liquidation.—The Deutsche Bundesbank can only be liquidated by law. The liquidation law shall make provision for the disposal of the assets.

Art. 45. Berlin clause.—In accordance with the provisions of Article 13 (1) of the Third Law on the Transfer of Financial Powers of January 4, 1952 (Bundesgesetzblatt, Part I, page 1), the present Law shall also apply to Land Berlin. In applying this Law the Deutsche Bundesbank shall take into consideration the economic situation of Berlin, if necessary by means of special regulations.

Art. 46. [Repealed]

Art. 47. Entry into force.—(1) This Law shall enter into force on the first day of the month following its promulgation; Article 40(5) and Article 41(1) and (2) shall, however, be effective as from April 1, 1951.

(2) In Land Berlin, Article 41(1) and (2) shall enter into force with effect from October 1, 1951, and Articles 35 and 37 not until the day following the publication, in the Gesetz- und Verordnungsblatt für Berlin, of the Law extending the validity of this Law to Berlin.9

The By-Laws of the Deutsche Bundesbank 1

By virtue of Article 34 of the Law Concerning the Deutsche Bundesbank, the Central Bank Council, with the approval of the Federal Government, issues the following By-Laws of the Deutsche Bundesbank:

I. Central Bank Council

Art. 1.—(1) The Central Bank Council shall meet at the invitation of the President of the Deutsche Bundesbank. Normally the Central Bank Council shall meet every two weeks. The President may also call additional meetings on special occasions. Meetings shall also be convened upon the request of at least three members.

(2) The meetings shall be held at the seat of the Deutsche Bundesbank. In special cases the Central Bank Council may decide to hold the meeting at some other place.

Art. 2.—(1) Invitations to meetings shall be issued in writing, with the agenda attached; in urgent cases meetings may be convened by telephone or telegraph.

(2) The agenda for the meeting of the Central Bank Council, together with the requisite documentation, shall be dispatched early enough that under ordinary mailing conditions they reach the members not later than the fourth working day before the meeting.

(3) Such subjects as have been placed on the agenda without regard for the period specified in paragraph (2) of this Article, or for which the requisite documentation has not been received within that period, shall be struck from the agenda if at least five of the members present object to their being considered and decided on.

(4) The Central Bank Council may decide that certain items be struck from the agenda or transferred to the agenda of a later meeting.

Art. 3.—(1) The Federal Minister of Economics and the Federal Minister of Finance shall be invited to attend each meeting of the Central Bank Council by transmittal of the agenda. The other members of the Federal Government shall be invited if an item on the agenda appears to call for their attendance. Article 2(1) shall apply correspondingly.

(2) Such members of the Federal Government as are invited to attend the meetings shall be furnished with material on matters of primary importance for monetary policy on which the Central Bank Council in the exercise of its powers in that field has to take a decision. Article 2(2) shall apply correspondingly.

Art. 4.—(1) Should both the President and the Vice-President simultaneously be prevented from attending, the Central Bank Council shall hold its meetings under the chairmanship of a member to be selected by it for this purpose.

(2) In the event of the President of a Land Central Bank being prevented from attending, the Vice-President of such Land Central Bank or, if he should likewise be prevented, another member of the Board of Management shall attend the meetings of the Central Bank Council in an advisory capacity. The Central Bank Council may exclude their attendance at the meeting for specific items under discussion, especially when deliberating on personnel matters affecting members of the Directorate or of the Boards of Management of the Land Central Banks.

(3) In the event of the President of a Land Central Bank being prevented from attending meetings for a prolonged period, he shall be represented by the Vice-President, who shall then have a vote. The Central Bank Council shall determine whether or not a prolonged absence has occurred.

Art. 5.—(1) If at least two thirds of the members of the Central Bank Council are present, they shall constitute a quorum.

(2) Votes on decisions may be taken in writing, by telegraph or by telephone only if the Central Bank Council has in one of its meetings taken a decision to this effect on the question concerned, or if not more than three members object.

Art. 6.—(1) Voting on decisions of the Central Bank Council on matters personally affecting members of the Directorate or the Boards of Management of the Land Central Bank shall be secret. The Central Bank Council may decide that voting on other matters shall likewise be secret.

(2) In cases where matters personally affecting a member of the Central Bank Council are under deliberation, such member shall not take part in the deliberation and the taking of a decision.

Art. 7.—(1) Minutes of the deliberations and decisions of the Central Bank Council shall be prepared and shall be signed by the chairman and the secretary of the meeting.

(2) The minutes shall be deemed to have been approved if no member raises any objection within three working days after they have been delivered. The minutes shall be deemed to have been delivered on the working day following the day on which they were mailed. Objections shall be resolved by the Central Bank Council.

Art. 8. The contracts made with the members of the Directorate and the Boards of Management of the Land Central Banks by decisions of the Central Bank Council shall be signed for the Central Bank Council by the President of the Deutsche Bundesbank and three further members to be nominated by the Central Bank Council.

II. Directorate

Art. 9.—(1) Meetings of the Directorate shall be held as required, normally twice every week. They shall be convened by the President of the Deutsche Bundesbank.

(2) If at least half the members of the Directorate are present, they shall constitute a quorum.

(3) The decision of the Directorate on the drawing up of the annual statement requires the concurrence of at least two thirds of the members of the Directorate.

Art. 10.—(1) The Directorate shall decide on the division of responsibilities among its members; such a decision shall not be taken unless all members are present and cannot be taken against the vote of the President.

(2) Decisions on matters which owing to their fundamental importance or the magnitude of the transaction involved exceed the limits of current business shall be taken by the Directorate.

(3) Any member may demand that a specific matter, even if it be outside his sphere of responsibility, be dealt with at a meeting of the Directorate.

Art. 11. If both the President and the Vice-President are prevented from attending, the chair shall be taken by a member to be selected by the Directorate.

III. Boards of Management of the Land Central Banks

Art. 12.—(1) Besides the President and the Vice-President, one further member of the Board of Management may be appointed for the Land Central Banks in

  • Baden-Württemberg,
  • Bayern, and
  • Nordrhein-Westfaien.

(2) For the Land Central Bank in Niedersachsen, a further member of the Board of Management may be appointed for the period up to October 31, 1960.

Art. 13. Meetings of the Board of Management shall be held as required, normally twice every week.

Art. 14. The Board of Management of a Land Central Bank shall take its decisions by a simple majority of the votes cast; in the event of a tie, the President shall have the deciding vote.

Art. 15.—(1) The Board of Management shall decide on the division of responsibilities among its members; such a decision shall not be taken unless all members are present and cannot be taken against the vote of the President.

(2) Decisions on matters which owing to their fundamental importance or the magnitude of the transaction involved exceed the limits of current business shall be taken by the Board of Management.

(3) Any member may demand that a matter, even if it be outside his sphere of responsibility, be dealt with at a meeting of the Board of Management.

IV. Advisory Boards at the Land Central Banks

Art. 16.—(1) Meetings of the Advisory Board to a Land Central Bank shall be convened by the Chairman. Normally the Advisory Board shall hold a meeting once every three months. The Chairman may call additional meetings as required; he must do so at the request of at least three members.

(2) The Chairman shall invite the Minister (or Senator) of Economics and the Minister (or Senator) of Finance to attend the meetings of the Advisory Board.2

Art. 17. The President of the Deutsche Bundesbank may, if the competent Land Government so requests, appoint a deputy for each member of the Advisory Board on the proposal of the Land Government and after consulting the Board of Management of the Land Central Bank. The deputy may attend meetings of the Advisory Board only when the ordinary member is prevented from attending.

Art. 18. The Chairman may invite experts to attend the meetings of the Advisory Board.

Art. 19. Members of the Advisory Board and the Land Ministers (Senators) or their deputies attending a meeting shall receive travel allowances and fees to be fixed in detail by the Central Bank Council.

Art. 20. In regard to subjects of discussion which are per se of a confidential nature or which the Chairman explicitly designates as confidential, the persons attending meetings of the Advisory Board shall be pledged to secrecy.

V. Branch Establishments

Art. 21. The Central Bank Council shall decide on the establishment and closing of Branches.

VI. Miscellaneous

Art. 22. In the Annual Report of the Deutsche Bundesbank the total emoluments of currently active and retired members of the Directorate of the Deutsche Bundesbank and/or the Central Bank Council and of the Directorate of the Bank deutscher Länder and the Boards of Management of the Land Central Banks, including those of their surviving next of kin, shall be announced in one sum.

Art. 23. Loans to members of the Directorate and of the Boards of Management of the Land Central Banks which in the aggregate exceed their emoluments for one month may be granted only by virtue of a decision of the Central Bank Council.

Art. 24. These By-Laws shall enter into force one day after publication in the Bundesanzeiger.

The Basic Law for the Federal Republic1

ARTICLE 70

(1) The Länder shall have the right of legislation insofar as this Basic Law does not accord legislative powers to the Federation.

(2) The division of competence between the Federation and the Länder shall be determined in accordance with the provisions of this Basic Law concerning exclusive and concurrent legislation.

ARTICLE 71

In the field of exclusive legislation of the Federation, the Länder shall have powers of legislation only if, and so far as, they are expressly so empowered in a Federal law.

ARTICLE 72

(1) In the field of concurrent legislation, the Länder shall have powers of legislation so long and so far as the Federation makes no use of its legislative right.

(2) The Federation shall have legislative rights in this field insofar as a necessity for regulation by Federal law exists because:

  • a matter cannot be effectively regulated by the legislation of individual Länder, or
  • the regulation of a matter by a Land law could prejudice the interests of other Länder or of the Länder as a whole, or
  • the preservation of legal or economic unity demands it, in particular the preservation of uniformity of living conditions extending beyond the territory of an individual Land.

ARTICLE 73

The Federation shall have exclusive legislative power in matters relating to:

… … … … ….

4. currency, money and coinage, weights and measures, as well as on matters pertaining to time and calendar [Zeitbestimmung];

5. the unity of customs and commercial territory, trade and navigation (shipping) agreements, the freedom of traffic in goods and payments with foreign countries, including customs and frontier inspection.

… … … … ….

ARTICLE 74

Concurrent legislation shall extend to the following fields:

… … … … ….

11. law relating to the economy (mining, industry, power supply, crafts, trades, commerce, banking, stock exchanges, private insurance);

… … … … ….

The Banking Law, 1961 1

SUMMARY

The Banking Law of the Federal Republic of Germany comprises 65 articles arranged in 6 sections, as follows: Section I, General Provisions (Arts. 1-9); Section II, Rules for Credit Institutions (Arts. 10-31); Section III, Rules Concerning the Supervision of Credit Institutions (Arts. 32-51); Section IV, Special Provisions (Arts. 52-53); Section V, Penalties and Fines (Arts. 54-60); and Section VI, Transitional and Concluding Provisions (Arts. 61-65).

Credit institutions are generally defined as enterprises engaged in banking transactions, if the scope of the said transactions requires a commercially organized business enterprise. Banking transactions for purposes of the Law include the receipt of money from others as deposits, irrespective of the payment of interest (deposit business); the granting of money loans and acceptance credits (credit business); the purchase of bills and checks (discount business); the purchase and sale of securities for account of others (securities business); the custody and administration of securities for the account of others (safe-custody business); the incurring of the obligation to acquire claims in respect of loans prior to their maturity; the undertaking of guarantees and other warranties for others (guarantee business); and the effecting of transfers and clearings (giro business).2 The Federal Minister of Economics may, after consultation with the Deutsche Bundesbank, designate by ordinance other transactions as banking transactions if this appears justified by usage and is compatible with the purpose of the Law (Art. 1(1)).

The following are not credit institutions within the meaning of the Law: the Deutsche Bundesbank, the German Federal Postal Institution, the Reconstruction Loan Corporation (Kreditanstalt für Wiederaufbau), and the social security institutions and the Federal Office for Labor Exchanges and Unemployment Insurance (Art. 2(1)).

The following entities, though not normally considered as credit institutions (see Art. 2(1), items 5-9), are as regards their banking transactions subject to this Law even though such transactions are generally not within the scope of their business: private and public-law insurance enterprises; building and loan associations; enterprises which have been recognized as public-benefit housing enterprises; enterprises which have been recognized as organs of governmental housing policy; and enterprises engaged in pawn-broking, to the extent that they give loans against pledges (Art. 2(3)).

The Federal Banking Supervisory Office (Bundesaufsichtsamt für das Kreditwesen) may determine that specified provisions of the Law are not applicable to individual credit institutions as long as the enterprise, by reason of the nature of its business, does not require supervision (Art. 2(4)).

Generally, the Federal Banking Supervisory Office shall decide in cases of doubt whether an enterprise is subject to the provisions of the Banking Law (Art. 4).

The Federal Banking Supervisory Office is established as an independent Federal agency under the jurisdiction of the Federal Minister of Economics. The Chairman of the Office shall be appointed by the Federal President on the proposal of the Federal Government, the latter having first heard the Deutsche Bundesbank (Art. 5).

The Banking Supervisory Office shall supervise the credit institutions in accordance with this Law and shall take action against abuses of the credit system which tend to endanger the safety of the assets entrusted to the credit institutions, impair the orderly carrying out of banking transactions, or entail substantial disadvantages for the economy as a whole (Art. 6).

Art. 7 of the Law contains provisions of a general nature on cooperation between the Banking Supervisory Office and the Bundesbank (see below, page 288). In the performance of its functions the Office may employ the services of other persons and institutions (Art. 8).

Persons employed in the Banking Supervisory Office may not, without authorization, reveal or use facts which have come to their knowledge in the course of their official functions and regarding which the observation of secrecy is in the interest of the credit institution or of a third party, especially business and operational secrets. The same duty of secrecy is incumbent on persons acting under Art. 8(1), Art. 30(2), and Art. 46(1) of the Law and on persons in the service of the Bundesbank (Art. 9).

Credit institutions shall have pledged capital resources (haftendes Eigenkapital) adequate to fulfill their obligations to their creditors and to safeguard the assets entrusted to them. The Banking Supervisory Office, in agreement with the Bundesbank, shall determine the principles on the basis of which it shall judge whether this requirement is met. These principles shall be published in the Bundesanzeiger (Art. 10(1)). Credit institutions shall invest their funds in such a way as to maintain adequate solvency at all times. The Banking Supervisory Office, in agreement with the Bundesbank, shall determine the principles on the basis of which it shall judge whether the liquidity of a credit institution is adequate, having first heard the associations representing the credit institutions. These principles shall be published in the Bundesanzeiger (Art. 11).3

The permanent investments of a credit institution in land, buildings, ships, and participations may not exceed, computed by reference to their book value, the capital of that institution. The Banking Supervisory Office may permit a credit institution to deviate temporarily from this provision (Art. 12).

“Large credits” to any one borrower, that is, credits which in the aggregate exceed 15 per cent of the capital of the credit institution, shall normally be reported forthwith to the Bundesbank. The Bundesbank shall transmit, with its comments, the reported credit transaction to the Banking Supervisory Office, unless the latter waives this requirement (Art. 13(1)). The amounts of “large credits” outstanding shall in the aggregate not exceed one half of the total credit transactions of the credit institution; this ceiling is to be computed on the basis of the amounts actually drawn (Art. 13(3)). Art. 13(5) of the Law provides that, in the computation of “large credits,” guarantees and other warranties as well as credits granted by means of the purchase of bills eligible at the Bundesbank are to be entered at only half their value.

Six times a year (not later than the tenth day of February, April, June, August, October, and December) credit institutions shall report to the Bundesbank those borrowers whose indebtedness has, at any time during the two calendar months preceding the reporting date, amounted to DM 1 million or more. The report shall indicate the amount of the borrower’s indebtedness at the end of the month preceding the report. The duty to report obtains also in respect of syndicate credits of DM 1 million or more, even if the amount of credit granted by an individual institution is less than DM 1 million (Art. 14(1)).

The Law also contains detailed rules regarding credits to persons who have a special relationship to a credit institution, such as managers, partners, members of supervisory bodies of the institution, and officers and employees of the institution (see Art. 15(1), items 1 to 11).4 It provides, in particular, that such credits may be granted only by virtue of a unanimous decision of all managers of the credit institution, and only with the express approval of the supervisory body; the permission to withdraw sums which exceed the remuneration due to a manager or to a member of the supervisory body shall be deemed equivalent to the granting of a credit (Art. 15 (1)).5

If credits are granted in disregard of Art. 15, the managers who thus violate their duties and the members of the supervisory body who in violation of their duty fail to prevent the granting of a legally impermissible credit are jointly liable, unless they prove that they did not act culpably. The credit institution’s claim for compensation may also be asserted by its creditors, to the extent that the claims of the creditors are not met by the credit institution (Art. 17(1) and (2)).

Credits within the meaning of Arts. 13-18 of the Law include money loans of all kinds, loan claims taken over, and acceptance credits; the discounting of bills;6 the postponement of claims by credit institutions in respect of nonbanking commercial transactions (especially merchandise transactions) beyond the customary maturity; a credit institution’s guarantees and other warranties on behalf of others; and a credit institution’s participation in a borrower’s enterprise (Art. 19(1)). Under Art. 19(1), item 5, any holding by the credit institution of shares of an enterprise amounting to at least 25 per cent of the capital of that enterprise is deemed to be a participation. A borrower within the meaning of Arts. 13-18 is defined in Art. 19(2).

The Law enumerates in Art. 20 exceptions to the provisions on credit transactions which are set forth in Arts. 13-18; these exceptions include, for example, credits to the Federal Government, to a Federal Special Fund, to a Land, or to a local authority.

Savings deposits and related matters are dealt with in Arts. 21 and 22. Savings deposits are deposits which are characterized as such by the issue of a document, in particular of a savings book (Art. 21(1)). Apart from this primarily procedural definition of savings deposits, the Law attempts to define savings deposits also by reference to the purpose of the deposit: “Only monies which serve for the accumulation or investment of capital shall be eligible as savings deposits; monies intended for use in business or payments transactions do not meet this requirement” (Art. 21(2)); and deposits of corporate bodies and of partnerships must meet these conditions in order to be accepted as savings deposits. The period of notice for the withdrawal of savings deposits is normally three months (legal period of notice); however, amounts up to DM 1,000 may be withdrawn without notice within 30 interest-days (Zinstagen) (Art. 22(1)). A period of notice in excess of three months may be agreed on for savings deposits, but may not be less than six months (Art. 22(2)). The rate of interest which is currently applicable to savings shall be displayed to the public in the cashiers’ hall (Kassenraum) (Art. 22(4)).

The terms on which credit institutions may grant credits and accept deposits may be determined by ordinance; such regulations shall fix limits for the interest and commissions charged to or payable by customers. The terms are to be fixed in such a manner that the measures of the Bundesbank in the field of credit policy are thereby supported and effective functioning of banking is safeguarded. The ordinances are issued by the Federal Minister of Economics in consultation with the Bundesbank (Art. 23).7

Credit institutions are required to report immediately to the Banking Supervisory Office and to the Bundesbank the organizational changes enumerated in Art. 24.8 It appears that the provisions of Art. 24 are primarily designed to keep the Office and the Bank informed so as to facilitate the exercise of their supervisory functions. The reports required under this Article are generally not a preliminary step to securing a license under Art. 32 of the Law, as evidenced by Art. 24(1), item 4, which obligates credit institutions to report “the changing of the legal form, except where a license is required under Article 32(1)” (italics supplied).

Credit institutions are required to submit monthly returns to the Bundesbank without delay. If monthly balance sheet statistics are prepared in accordance with Art. 18 of the Law Concerning the Deutsche Bundesbank, these are deemed to meet the requirement of the first sentence of Art. 25(1) of the Banking Law. The Bundesbank shall transmit these monthly returns to the Banking Supervisory Office with its comments, unless the Office waives this requirement (Art. 25(2)).

Credit institutions shall submit to the Banking Supervisory Office and the Bundesbank without delay their approved annual statement of accounts, comprising the annual balance sheet and the profit and loss account and their annual report, if any (Art. 26).

Art. 26a provides that credit institutions may, in their balance sheets, assess claims and securities at lower values than those prescribed or admissible under Art. 155 of the Law on Shares of September 6, 1965, if such assessment is reasonably necessary to allow for the special risks involved in carrying on credit business.

Before being approved, a credit institution’s annual statement of accounts, including the annual report insofar as it explains the annual statement of accounts, shall be audited by one or more auditors (Art. 27(1)). Art. 28 sets forth rules governing the appointment of auditors and requires the credit institution to notify the Banking Supervisory Office of the auditor which it has selected. The Office may, within a month after receipt of such notification, require the appointment of another auditor if this is necessary for the purpose of attaining the object of the audit. Upon request by the Banking Supervisory Office, the auditor shall explain the audit report to that Office and to the Bundesbank and shall give information regarding his findings in the course of the auditing (Art. 29(1)).

Credit institutions engaged in the securities business or in the safe-custody business (see Art. 1(1), items 4 and 5) shall normally be examined once a year by so-called deposit examiners appointed by the Banking Supervisory Office; the right to appoint such examiners may in individual cases be conferred on the Bundesbank (Art. 30).

Under Art. 31 of the Law, the Federal Minister of Economics may, after hearing the Bundesbank, exempt all or certain groups of credit institutions from specified provisions of the Law and may delegate this power to the Banking Supervisory Office; Art. 31 (2) gives to the Office the power to grant certain exemptions.

Any person who intends to engage in banking transactions through a commercially organized business enterprise as defined in Art. 1(1) of the Law requires a license issued by the Banking Supervisory Office. In granting the license, the Office may specify conditions that are not inconsistent with the Law; in particular, it may limit the license to specified categories of banking transactions (Art. 32). Under Art. 61 of the Law, a credit institution which on January 1, 1962 was authorized to carry on banking transactions within the scope of Art. 1(1) is deemed to have received the license pursuant to Art. 32.

A license may be refused only (a) if the resources which are available in the territory to which this Law applies 9 are considered insufficient; (b) if there is evidence that the applicant institution or manager (see Art. 1(2)) is not trustworthy; or (c) if there is evidence that the owner or one of the managers of the institution (see Art. 1(2)) does not have the qualifications required for a managerial position (Art. 33(1)). Art. 33(2) provides that the professional qualifications for directing a credit institution will ordinarily be assumed if three years’ managing activity in a credit institution of comparable size and type can be proved.

A license expires within a year if the holder of the license has not used it during this period (Art. 35(1)). A license may be revoked by the Banking Supervisory Office (a) if it has been obtained through misrepresentation, fraud, threat, or by other improper means; (b) if the business activity authorized under the license has not been exercised for a year; (c) if facts become known which would justify the refusal of a license under Art. 33(1), items 2 or 3; or (d) if the deposits (valuables, assets) are threatened, and such threat cannot be averted through other measures compatible with this Law (Art. 35(2)). The Banking Supervisory Office may also require the dismissal of a manager or suspension of his activity if any of the situations envisaged in Art. 35(2), item 3, arises (Art. 36).

Art. 38 provides that the Banking Supervisory Office, when it revokes a license pursuant to Art. 35, may determine that the credit institution concerned (except public-law entities) shall be liquidated. Such a determination has the effect of an order to liquidate; it shall be communicated to the Registration Court and shall be entered by the latter in the Commercial Register or Register of Cooperative Societies, and the Banking Supervisory Office may publicly announce the revocation.

Unless otherwise provided by law, the word “bank” or “banker,” or a term which includes the word “bank” or “banker,” may be used in the name of the firm or in the designation of the purpose of a credit institution only by licensed or otherwise authorized credit institutions (Art. 39(1) in conjunction with Art. 61). The term Volksbank (people’s bank) may be used only by a credit institution which is organized as a registered cooperative and which belongs to an audit association (Art. 39(2)). The Banking Supervisory Office, when granting a license, may determine that the word “bank” or “banker” may not be used if the nature or scope of the credit institution’s business does not justify the use of these terms (Art. 39(3)).

The provisions of Art. 40(1) relating to the use of the word “savings bank” are analogous to those contained in Art. 39(1).

In doubtful cases the Banking Supervisory Office shall decide whether an enterprise is entitled to use the word “bank” or “banker” under Arts. 39 and 40 (Art. 42). If an enterprise uses the word “bank” or “banker” in a manner incompatible with Arts. 39-41, the Registration Court shall ex officio cause to have canceled the name of the firm or the relevant word (Art. 43(2)).

The Banking Supervisory Office may (a) require from credit institutions information regarding all business matters, including submission of their accounts and records, in order to carry out the necessary inspections; (b) participate, with the right to be heard, in principal and general meetings of corporations, in meetings of partners, and in meetings of supervisory bodies; and (c) require credit institutions to convene these meetings where appropriate (Art. 44 (1)). The power to require information of this kind shall also be vested in the Bundesbank, to the extent that it requires this information for the purpose of discharging its special responsibilities under this Law (Art. 44(3)).

If the capital resources of any credit institution do not meet the requirement set forth in the first sentence of Art. 10(1),10 or if the manner in which the resources are invested is incompatible with the first sentence of Art. 11,11 the Banking Supervisory Office may prohibit or restrict (a) withdrawals by the proprietors or partners, (b) the distribution of profits, and (c) the granting of credits (Art. 45(1)), provided that the credit institution has failed to remedy the situation within a period specified by the Office (Art. 45(2)). If the credit institution fails to comply with the investment provision of Art. 11, the Banking Supervisory Office may also prohibit the investment of available funds in land, buildings, ships, and participations (Art. 45 (1)).

If the ability of a credit institution to meet its obligations toward its creditors is threatened and, in particular, if the deposits and assets entrusted to it are endangered, the Banking Supervisory Office may take provisional measures to avert such dangers. Accordingly, it may issue directives on the conduct of the institution’s business; prohibit or limit the acceptance of deposits and the granting of credit; and prohibit or limit the activity of proprietors or managers and appoint supervisors (Art. 46(1)).

If credit institutions face financial difficulties which are likely to endanger the economy as a whole and, in particular, the orderly flow of payments, the Federal Government may order as follows: It may authorize a credit institution to defer performance of its obligations and prescribe that, enforcement action, attachments, and injunctions against the institution are inadmissible during such deferment. It may provide that credit institutions shall remain temporarily closed and that they shall neither make nor receive payments and transfers on behalf of their customers; such an order may be addressed to all credit institutions or it may be confined to specified groups of credit institutions or banking transactions. It may prescribe that the stock exchanges shall be closed temporarily (Art. 47(1)). The Federal Government, before taking any of the aforementioned measures, shall consult with the Bundesbank (Art. 47(2)).

The Federal Government may, after consultation with the Bundesbank, issue rules by ordinance for the resumption of payments and transfers and of stock exchange business; it may, however, provide for withdrawals to be temporarily restricted (Art. 48(1)). Such orders, as well as those issued under Art. 47(1), shall cease to have effect three months after they have been issued unless they have been previously revoked (Art. 48(2)).

Under Art. 51(1) of the Law, 90 per cent of the costs of the Banking Supervisory Office—other than those covered by fees or special reimbursements under Art. 51(3)—shall be refunded to the Federal Government by the credit institutions. The Federal Minister of Economics shall, with the concurrence of the Federal Minister of Finance, regulate by ordinance details regarding the levy and its collection.

The Law provides as follows in Art. 52(1): “Insofar as credit institutions are subject to any other governmental supervision, this supervision shall remain in addition to the supervision by the Banking Supervisory Office.” It appears, however, that in practice this provision has been superseded by the decision of the Federal Constitutional Court (Bundesverfassungsgericht) of July 24, 1962 relating to the compatibility of the Banking Law with the Federal Constitution (Grundgesetz).12

If in the territory in which this Law is applicable a foreign enterprise maintains a branch which conducts banking transactions in the sense of Art. 1(1) of the Law, such branch shall be deemed to be a credit institution (Art. 53(1)). The commencement of banking activity by any branch of a foreign enterprise requires a license (Art. 53(2), item 5).

Arts. 54-60 of the Law specify—under the heading Penalties and Fines—the legal consequences of contravening various provisions of the Law.

ARTICLES 7, 10, 11, 23, AND 24

Art. 7. Cooperation with the Deutsche Bundesbank.—(1) The Federal Banking Supervisory Office and the Deutsche Bundesbank shall cooperate in accordance with this Law. The Deutsche Bundesbank and the Banking Supervisory Office shall exchange observations and findings which may be of importance for the performance of their respective functions. The Deutsche Bundesbank shall to that extent also make available to the Banking Supervisory Office the data which it obtains on the basis of statistical investigations carried out in accordance with Article 18 of the Law Concerning the Deutsche Bundesbank. Before requiring the collection of such statistics it shall hear the Banking Supervisory Office; Article 18, sentence 5, of the Law Concerning the Deutsche Bundesbank shall apply as appropriate.

(2) The Chairman of the Banking Supervisory Office, or—in case he is prevented from attending—his deputy shall be entitled to attend the meetings of the Central Bank Council of the Deutsche Bundesbank insofar as it discusses subjects within his range of responsibilities. He shall have no right to vote, but may make motions.

Art. 10. Capital resources.—(1) With a view to fulfilling their obligations to their creditors, and particularly in order to safeguard the assets entrusted to them, credit institutions shall have adequate pledged capital resources [haftendes Eigenkapital]. In agreement with the Deutsche Bundesbank, the Federal Banking Supervisory Office shall establish principles according to which it shall judge, as a rule, whether the requirements of sentence 1 have been fulfilled; the associations representing the credit institutions shall first be heard. The said principles shall be published in the Bundesanzeiger.13

(2) The following are to be regarded as liable funds:

  • in the case of sole proprietors [Einzelkaufleute], general partnerships [offene Handelsgesellschaften] and limited partnerships [Kommanditgesellschaften], the capital and the reserves after deduction of the withdrawals by the proprietor or by the personally liable partners and of the credits granted to them, as well as of any excess of debt on the personal property of the proprietor; in the case of general partnerships and limited partnerships, account is to be taken only of the paid-up capital;
  • in the case of joint-stock companies [Aktiengesellschaften], of companies limited by shares [Kommanditgesellschaften auf Aktien], and of limited-liability companies [Gesellschaften mit beschränkter Haftung], the paid-up capital, less the amount of company-owned shares, and the reserves; furthermore in the case of companies limited by shares, amounts contributed by the personally liable partners but not paid into the capital, less the withdrawals by the personally liable partners and the credits granted to such partners;
  • in the case of registered cooperative societies [eingetragene Genossenschaften], the amounts paid in as shares and the reserves plus an addition, to be fixed by ordinance by the Federal Minister of Economics after hearing the Deutsche Bundesbank and which allows for the liabilities of the members; amounts paid in as cooperative shares by members who are withdrawing at the close of the business year shall be deducted; the Federal Minister of Economics may delegate to the Federal Banking Supervisory Office the authority to issue orders;
  • in the case of public-law savings banks, as well as of private-law savings banks which are recognized as public savings banks, the reserves;
  • in the case of public-law credit institutions which do not fall under item 4, the paid-up endowment funds (Dotationskapital) and the reserves;
  • in the case of credit institutions in any other legal form, the paid-up capital and the reserves.

(3) The net profit shall be counted as part of the liable funds insorar as a decision has been taken to allocate it to the capital, to the reserves or to the paid-up cooperative shares; any losses incurred are to be deducted from the liable funds. Reserves within the meaning of paragraph (2) are deemed to comprise only the amounts shown as reserves to the exclusion of those liability items which—on the basis of fiscal regulations—are subject to taxation only upon liquidation.

(4) Capital contributions by dormant partners are to be counted as part of the liable funds only if they fully participate in any loss or cannot be reclaimed until the creditors of the credit institution have been satisfied. Upon request and to an extent to be determined by the Federal Banking Supervisory Office, any proved personal property of the proprietor or of the personally liable partners may be considered as liable funds.

(5) The criterion for determining the amount of the liable funds shall be the latest balance sheet established for the end of a business year. Changes in capital which have been entered in public registers at a later date shall be taken into account.

Art. 11. Liquidity.—Credit institutions shall invest their funds in such a way as to safeguard adequate solvency at all times. In agreement with the Deutsche Bundesbank, the Federal Banking Supervisory Office shall establish principles according to which it shall judge, as a rule, whether the liquidity of a credit institution is adequate; the associations representing the credit institutions shall first be heard. The principles shall be published in the Bundesanzeiger.14

Art. 23.—(1) Regulations regarding the terms on which credits may be granted, and deposits accepted, may be made for credit institutions by ordinance. The said regulations shall fix limits for the interest and commissions which may be charged in respect of the granting of credits or the acceptance of deposits; these terms are to be fixed so as to support the credit policy measures of the Deutsche Bundesbank and safeguard the effective functioning of banking. In this connection, care shall be taken to ensure a supply of credit adequate to over-all economic development and to promote savings activity. The ordinances will be issued by the Federal Minister of Economics in consultation with the Deutsche Bundesbank. The Federal Minister of Economics may delegate this power to the Federal Banking Supervisory Office on condition that the latter’s ordinances shall be issued only in agreement with the Deutsche Bundesbank.

(2) In order to counteract abuses in the soliciting of business by credit institutions, the Federal Banking Supervisory Office may prohibit certain kinds of solicitation.

(3) Prior to the issue of ordinances in accordance with paragraph (1), and prior to the adoption of general measures in accordance with paragraph (2), the associations representing the credit institutions shall be heard, and if the ordinance relates to deposit interest rates or if a general measure under paragraph (2) is adopted, the German Federal Postal Administration shall also be heard.

Art. 24. Notification.—(1) Credit institutions shall immediately notify the Federal Banking Supervisory Office and the Deutsche Bundesbank of the following:

  • the appointment of any manager and the authorizing of any person to represent individually the credit institution in its entire sphere of business, stating the facts which are material for an appraisal of such person’s trustworthiness and professional qualifications;
  • the termination of employment of any manager, and the withdrawal of the power to represent individually the credit institution in its entire sphere of business;
  • the acquisition of a permanent participation in any other credit institution;
  • the changing of the legal form, except where a license is required under Article 32(1);
  • changes in capital which must be entered in public registers;
  • the transfer of the location or the registered office;
  • the establishment, transfer and closing of any branch office;
  • the cessation of business.

(2) Any credit institution planning to merge with another credit institution shall in good time notify the Federal Banking Supervisory Office and the Deutsche Bundesbank.

NOTICE NO. 1/62 ON THE PRINCIPLES GOVERNING THE CAPITAL RESOURCES AND LIQUIDITY OF CREDIT INSTITUTIONS 15

The Federal Banking Supervisory Office, pursuant to Article 10(1), sentence 3, and Article 11, sentence 3, of the Banking Law of July 10, 1961, hereby announces the principles, established in agreement with the Deutsche Bundesbank and after consultation with the associations representing the credit institutions, which as a rule will guide it in deciding whether the capital resources [Eigenkapital] of a credit institution are appropriate and whether a credit institution’s liquidity is adequate (Article 10(1) and Article 11 of the Banking Law).

If a credit institution, by a considerable margin or repeatedly, exceeds the ceilings established by the principles, it may as a rule be presumed that it lacks the necessary capital resources (Principles I and Ia) or that its liquidity is inadequate (Principles II and III). In deciding whether a credit institution’s capital resources and liquidity are adequate, special circumstances that would justify lesser—or, as the case may be, more stringent—requirements may be taken into account.

Public mortgage banks and installment credit institutions shall be subject to Principle I only.

The principles shall not apply to private mortgage banks that do not avail themselves of the right to the status of large-scale business enterprises as defined in Article 46(1) of the Mortgage Bank Law, to maritime mortgage banks, to central security depositories, to investment companies, or to credit institutions that engage exclusively in banking operations as defined in Article 1(1), items 7 and 8, of the Banking Law.

The principles as amended on August 25, 1964 shall enter into force on January 1, 1965.

Principle I

A credit institution’s credit to business enterprises, individuals and other credit institutions plus its participations, less the global value adjustment, shall not exceed 18 times its pledged capital resources [haftendes Eigenkapital].

Credit shall be understood to include short-, medium- and long-term credit. There shall be included only 50 per cent of long-term credit that serves as cover for debt certificates, that is granted against a real estate lien in connection with mortgage lending as defined in Article 20(2), items 1 and 4, of the Banking Law or is granted against equivalent liens on ships, or that is fully guaranteed by domestic corporate entities or public-law institutions.

Principle Ia

A credit institution’s own acceptances, promissory notes, and bills drawn on borrowers that are in circulation shall not exceed 1.5 times its pledged capital resources.

Principle II

A credit institution’s investments in long-term credit, in syndicate holdings, in participations, in securities not quoted on the stock exchange, and in land and buildings shall not exceed its long-term financial resources.

  • The following are to be regarded as long-term financial resources: the capital resources,
  • the credit institution’s own bonds in circulation,
  • bonds sold in advance of issue,
  • long-term loans acquired,
  • 60 per cent of the savings deposits,
  • 10 per cent of the sight and time deposits of nonbanks.

In the case of central giro institutions and central cooperative credit institutions, the following shall in addition be included:

  • 20 per cent of the member institutions’ time deposits subject to notice or running for an agreed period of from six months to four years;
  • 50 per cent of the member credit institutions’ time deposits subject to notice or running for an agreed period of at least four years.

Principle III

A credit institution’s debtors, its bills drawn on borrowers, its dividend-bearing stock exchange securities and its “other assets” shall not exceed the total of the following financial resources:

  • 60 per cent of the sight and time deposits of nonbanks,
  • 35 per cent of the sight and time deposits of credit institutions,
  • 20 per cent of the savings deposits,
  • 35 per cent of funds accepted at notice or for periods of from one month to four years, excluding customers’ use of credits opened at credit institutions abroad,
  • 80 per cent of customers’ use of credits opened at credit institutions abroad,
  • 80 per cent of liabilities arising from own acceptances, promissory notes and bills drawn on borrowers,
  • plus the surplus or less the shortfall of financial resources as defined in Principle II.

In the case of credit institutions engaging in commodity transactions, the stocks of goods included in the item “other assets” shall be disregarded.

The Monetary Unit: A Note

The basic monetary unit of the Federal Republic of Germany is the deutsche mark.

By virtue of Art. 1(1) of the Currency Law of June 18, 1948, the deutsche mark was designated as the unit of account with effect from June 21, 1948. For historical information on the deutsche mark, the mark, the rentenmark, and the reichsmark, see René Sédillot, Toutes les monnaies du monde: Dictionnaire des changes (Paris, 1955), pp. 21-22, p. 126 (deutsche mark), pp. 435-437 (reichsmark), and pp. 438-439 (rentenmark).

Par Value. With effect from January 30, 1953, the Federal Republic of Germany agreed with the International Monetary Fund on an initial par value of 0.211588 gram of fine gold per deutsche mark or 4.20 deutsche mark per U.S. dollar. With effect from March 6, 1961, the Fund concurred in the proposal of Germany to change the par value to 0.222168 gram of fine gold per deutsche mark or 4 deutsche mark per U.S. dollar.

The Subsidiary Coins Law, 19501

Art. 1. Subsidiary coins of 1, 2, 5, 10 and 50 deutsche pfennig (Pf) and of 1, 2 and 5 deutsche mark (DM) shall be minted as federal coins.

Art. 2. The subsidiary coins that are to be minted in conformity with Article 1 shall be legal tender, subject to the provisions of Article 3.

Art. 3.—(1) No one is required to accept in payment coins denominated in deutsche mark in an amount exceeding DM 20 and coins denominated in pfennig in an amount exceeding DM 5.

(2) Federal cash offices and cash offices of the Länder shall accept in payment or shall exchange for other legal tender, coins referred to in paragraph (1) without limitation of amount. Under this Law cash offices of the German Post Office are considered to be Federal cash offices.

Art. 4. The acceptance and exchange requirement is not applicable to coins that have been pierced or have diminished in weight for reasons other than as a result of normal circulation, or to counterfeit coins.

Art. 5. The minting of Federal coins in excess of an amount of twenty deutsche mark per inhabitant requires the approval of the Board of Directors of the Deutsche Bundesbank.

Art. 6.—(1) The Federal Government shall fix the shape and weight of the coins to be minted as well as, in agreement with the Board of Directors of the Deutsche Bundesbank, the distribution of the amounts to be minted among the various denominations and the material and alloy.

(2) The shape, weight, material and alloy of the coins shall be announced.

Art. 7.—(1) The subsidiary coins shall be minted by order and for the account of the Federal Government in the mints of the Länder that declare their willingness to do so. The minting process shall be under the supervision of the Federal Minister of Finance.

(2) The Federal Minister of Finance shall provide the mints with the metals required for minting.

(3) The Federal Minister of Finance, with the approval of the Bundesrat, shall determine the distribution among the individual mints of the amounts to be minted and the compensation which the mints are to receive in equal measure for minting each type of coin.

Art. 8.—(1) The Federal coins shall be put into circulation by the Deutsche Bundesbank in accordance with demand. To this end the Deutsche Bundesbank, subject to the provisions of paragraph (2), shall accept from the Federal Government the Federal coins minted in conformity with Article 1 and credit them at face value.

(2) If coins have been minted in a total amount exceeding twenty deutsche mark per inhabitant, the holdings of the Deutsche Bundesbank shall not exceed for any considerable length of time 15 per cent of the total amount of Federal coins in circulation. If during a period of six months its holdings at the end of each month have continually exceeded the maximum level, the Deutsche Bundesbank shall place coins in a special deposit for the account of the Federal Government in the amount by which the maximum level was exceeded at the end of the last month. Should its holdings at the end of a month again fall below the maximum level, they shall be replenished correspondingly.

Art. 9. Coins whose weight and recognizability have considerably diminished as a result of prolonged circulation and wear shall be accepted by all Federal cash offices and cash offices of the Länder. They shall then, for the account of the Federal Government, be withdrawn from circulation.

Art. 10.—(1) The Federal Government is authorized, with the approval of the Bundesrat, to withdraw coins from circulation. The period for redemption must be at least three months.

(2) The withdrawal from circulation of coins shall be published in the Bundesgesetzblatt. It shall, furthermore, be announced in the Bundesanzeiger and the daily papers that are used for official announcements by the lower administrative authorities.

Art. 11.—(1) The coins minted on behalf of the Deutsche Bundesbank shall from the time this Law enters into force have the status of Federal coins.

(2) The Deutsche Bundesbank shall reimburse the Federal Government for the equivalent value of coins that it has already issued at the time this Law enters into force; the Federal Government shall reimburse the Deutsche Bundesbank for the manufacturing costs of the coins minted on its behalf.

Art. 12. The Federal Government shall, with the approval of the Bundesrat, issue the administrative regulations for the enforcement of this Law.

Art. 13. This Law enters into force on the day following its publication.

The Bretton Woods Agreements Law, 1952 1

Art. 1. The adherence of the Federal Republic of Germany to the Articles of Agreement of the International Monetary Fund and the International Bank for Reconstruction and Development, adopted at the United Nations Monetary and Financial Conference of Bretton Woods (N.H., U.S.A.) held from July 1 to July 22, 1944, is hereby approved.

Art. 2. To comply with the obligations which the Federal Republic of Germany has to fulfill as a member of the International Monetary Fund, with a quota in the amount of one billion two hundred million U.S. dollars, and as a shareholder of the International Bank for Reconstruction and Development, with a subscription to the Bank’s capital in the amount of one billion two hundred and eighty million U.S. dollars, the Federal Minister of Finance is authorized to appropriate a credit to a maximum of nine billion six hundred and five million deutsche mark.2

Art. 3. The Bank deutscher Länder is authorized to grant to the Federal Republic of Germany, for meeting the obligations mentioned in Article 2, a credit of up to one hundred and eighty-four million deutsche mark in excess of the amount established pursuant to Article 1, Section 2d, of Law No. 15 of the Allied High Commission amending the legal provisions concerning banking and currency reform of December 15, 1949 (Amtsblatt of the Allied High Commission in Germany, page 70).

Art. 4. The Bank deutscher Länder is authorized to transact the business of the Federal Republic of Germany with the International Monetary Fund and the International Bank for Reconstruction and Development pursuant to Article V, Section 1, of the Articles of Agreement of the International Monetary Fund and Article III, Section 2, of the Articles of Agreement of the International Bank for Reconstruction and Development. Furthermore, the Bank deutscher Länder is authorized to act as depository for the International Monetary Fund pursuant to Article XIII, Section 2, of the Agreement of the International Monetary Fund and as depository for the International Bank for Reconstruction and Development pursuant to Article V, Section 11, of the Agreement of the International Bank for Reconstruction and Development.3

Art. 5.—(1) The two Agreements mentioned in Article 1 are published below with force of law.

(2) The day on which they enter into force for the Federal Republic of Germany is to be announced in the Bundesgesetzblatt.4

Art. 6. The present Law is valid also in the Land Berlin in accordance with Article 13 of the Law Concerning the Status of the Land Berlin in the Financial System of the Federation (Third Transitional Law) of January 4, 1952 (Bundesgesetzblatt, Part I, page 1).

Art. 7. The present Law enters into force on the day after its publication.

[The Articles of Agreement of the Fund and of the Bank, which were published in German and English in the Bundesgesetzblatt immediately following this Law, have been omitted here.]

Bibliographical Note

PUBLICATIONS OF THE DEUTSCHE BUNDESBANK

    Geschäftsbericht (annual 1957—). Also published in English with the title Report.For 1950-57 the Bank deutscher Länder issued its Geschäftsbericht annually; there are eight volumes in this series the first covering1948–49.

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    Monatsberichte (monthly August 1957—). Also published in English as Monthly Report. This publication supersedes Monatsberichte der Bank deutscher Länder (January1949-July1956) published in English as Monthly Report of the Bank deutscher Länder.

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PUBLICATIONS RELATING TO BANKING AND CENTRAL BANKING

    Bank deutscher LänderDie Gesetze zur Neuordnung des Geldwesens ([Frankfurt am Main] 1949-51loose-leaf). Includes the text of the four laws for the reform of the monetary system published on July 14 1948 by the Bank deutscher Länder the law concerning the establishment of the Bank deutscher Länder and related measures.

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    BickelHansHandels- und Gesellschaftsrecht unter besonderer Berück-sichtigung des Bank- und Sparkassengeschäfts (Stuttgart1962).

    BlessingKarlNotenbank, Staat und Wirtschaft,in Schmollers Jahr-buch für Gesetzgebung Verwaltung und Volkswirtschaft (Berlin) Vol. 83 No. 6 (1963) pp. 657667.

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    BrehmerEkhardStruktur und Funktionsweise des Geldmarktes der Bundesrepublik Deutschland seit 19482nd ed. (Tübingen1964).

    ConsbruchJ. and A.MöllerGesetz über das Kreditwesen mit verwandten und zugehörigen Vorschriften,4th ed. (Munich and Berlin1962).

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    FalchKurtBankenstruktur und Bankenliquidität: ein Beitrag zum Wettbewerbsproblem im deutschen Bankwesen,Österreichisches Bank-Archiv (Vienna) February1966 pp. 3850.

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    Handbuch des gesamten Kreditwesens7th ed.byHermannDelorme and HerbertSchlicht (Frankfurt am Main1965).

    HeroldH. and W.LippischBank- und Börsenrecht: Systematischer Grundriss2nd ed. (Berlin1962).

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    MüllerRudolfDie Grenzen des Bankgeheimnisses,Neue Juristische Wochenschrift (Munich) May91963 pp. 833838.

    Obst-HintnerGeld-Bank- und Börsenwesen35th ed.byOttoHintner (Stuttgart1963). See in particularDas Bankwesen in Deutschland,” pp. 216366and “Die gesetzlichen Bestimmungen und sonstigen Vorschriften für das Kreditwesen und die Bankenaufsicht” pp. 378648.

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    OpieR. G.Western Germany,inR. S.Sayersed.Banking in Western Europe (Oxford1962) pp. 53123.

    ReischauerF. and J.KleinhansKreditwesengesetz (KWG): Loseblatt kommentar für Praxis nebst sonstigen Bank- und Sparkassenrechtlichen Aufsichtsgesetzen sowie ergänzenden Vorschriften (Berlin1963).

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    RittershausenH.Banking in Western Germany,inH. W.Auburned.Comparative Banking3rd ed. (London1966) pp. 6371.

    SalzmannK. and J. H.EiblBankrecht: Sammlung der Gesetze, Verordnungen über Organisation, Geschäftsbetrieb und Tarifrecht der Banken, Sparkassen und Kreditgenossenschaften in der Bundesrepublik Deutschland (Munich, no date)4 vols.loose-leaf.

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    SchmidtW.Deutsche Bundesbank,in Eight European Central Banks (London and New York1963) pp. 5496.

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RELATED LAWS

Banking Law

    Hypothekenbankgesetz (Law on Mortgage Banks)ofFebruary51963 (Bundesgesetzblatt,Part I p. 81).

Bills of Exchange and Check Law

    Scheckgesetz (Law on Checks)ofAugust141933 (ReichsgesetzblattPart Ip. 597).

    Wechselgesetz (Bills of Exchange Law)ofJune211933 (ReichsgesetzblattPart I p. 399).

    See also section entitledDeutschlandinSchettler and BüelerDasWechsel- und Scheckrecht alterLänder (Cologne1957loose-leaf).

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Company Law

    Aktiengesetz (Law on Shares)ofSeptember61965 (BundesgesetzblattPart I p. 1089). The first title of this Law (Secs. 1-277) covers joint-stock companies and the second title (Secs. 278-290) partnerships limited by shares.

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    Handelsgesetzbuch (Commercial Code)ofMay101897 (Reichsgesetzblatt p. 219). Book II of the Code contains provisions on company law relating to partnership (Secs. 105-160), partially limited liability company (Secs. 161-177), and silent partnership (Secs. 335-342).The provisions of this Code have been superseded in part by subsequent laws for example the above-mentioned Law on Shares.

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    On various aspects of company law see also section entitledDeutschland” in Jura Europae: Droit des sociétés; Gesellschaftsrecht (Berlin, Munich, and Paris1964loose-leaf; bilingual edition in French and German) Vol. I.

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European Recovery Program—Special Fund

    Gesetz vom 31. Januar1950betreffend das Abkommen über wirtschaft-liche Zusammenarbeit zwischen den Vereinigten Staaten von Amerika und der Bundesrepublik Deutschlandvom 15. Dezember1949 (Law of January 31, 1950 relating to the Agreement on Economic Cooperation Between the United States of America and the Federal Republic of Germany of December 15, 1949) (Bundesgesetzblatt p. 9).

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    Gesetz über die Verwaltung des ERP-Sondervermögens (Law on the Administration of the ERP Special Fund) (BundesgesetzblattPart I p. 1312).

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1

Gesetz über die Deutsche Bundesbank of July 26, 1957 as amended through July 31, 1966. For the official German text, see Bundesgesetzblatt, 1957, Part I, pp. 745 ff. In the version published here, the word Section corresponds to the German word Abschnitt and the word Article (Art.) to the sign §.

2

For an English version of the 1948 law, together with an explanatory note, see Federal Reserve Bulletin (Washington), March 1948, pp. 279-283. On the liquidation of the Deutsche Reichsbank, see Gesetz über die Liquidation der Deutschen Reichsbank und der Deutschen Golddiskontbank of August 2, 1961 (Bundesgesetzblatt, 1961, Parti, p. 1165).

3

By virtue of this Article, the Land Central Banks (Landeszentralbanken) were merged (verschmolzen) with the Berlin Central Bank and the Bank deutscher Länder and were thereby transformed into a unitary bank, the Deutsche Bundesbank. However, as evidenced by Art. 8(1) and other provisions of the Law, the Land Central Banks, although they are no longer legally independent entities, continue to function as Main Offices of the Bundesbank in each Land enumerated in Art. 8(1).

It is noteworthy that under the present central bank regime the Land Central Banks have a dual status: In matters in which they act as Main Offices of the Deutsche Bundesbank, they act as organs of that Bank. But in matters which are reserved to them under the Law Concerning the Deutsche Bundesbank, and in matters reserved to them under their respective organic laws, they act in their own name and on their own account.

4

The German version refers in Art. 3 to währungspolitische Befugnisse rather than to “powers in the field of monetary policy,” and in Art. 4 to übernationaler Währungspolitik, an expression which is rendered here as “supranational currency policy.” The term Währung, as such or in combination with other terms, is frequently used to cover both domestic and foreign aspects of currency. For this reason, Währungspolitik is broader in scope than “monetary policy” in the sense in which the latter term is frequently used by monetary technicians.

5

See Notice No. 1/62, below, pp. 291-293.

6

The By-Laws are published below, pp. 272-276.

7

The term Basic Law refers to the Basic Law for the Federal Republic of Germany, or the so-called Bonn Constitution of May 23, 1949.

8

That paragraph reads as follows: “Foreign exchange as used in this paragraph covers means of payment and bills of exchange expressed in foreign currencies and balances with foreign banks.”

9

The Law entered into force on August 1, 1957, with the exception of the provisions which, under Art. 47, took effect on April 1, 1951 and October 1, 1951.

1

Satzung der Deutschen Bundesbank, adopted by the Central Bank Council of the Deutsche Bundesbank on November 27, 1958 and approved by the Federal Government on December 19, 1958. For the original text in German, see Bundesanzeiger, No. 7, January 13, 1959. In the version published here (which is amended through July 31, 1966), the word Article (Art.) corresponds to the sign §.

2

In the case of Berlin, Bremen, and Hamburg, where there is no Minister of Economics or Finance, the corresponding officers, that is, the Senator for Economics (Wirtschaftssenator) and the Senator for Finance (Finanzsenator), shall be invited.

1

Grundgesetz für die Bundesrepublik Deutschland. Promulgated on May 23, 1949 and effective March 15, 1955.

1

Gesetz über das Kreditwesen (or Kreditwesengesetz) of July 10, 1961 as amended by the Introductory Law to the Law on Shares of September 6, 1965. The Law entered into force on January 1, 1962. For the official text in German, see Bundesgesetzblatt, 1961, Part I, pp. 881 ff. In the summary presented here, an unofficial translation supplied by the Deutsche Bundesbank has for the most part been followed in regard to terminology. Arts. 7, 10, 11, 23, and 24 are published below, pp. 288-291. In those Articles, as well as in the summary, the word Article (Art.) corresponds to the sign §.

2

In item 6 of Art. 1(1) express reference is also made to “investment fund business” in the sense of Art. 1 of the Law on Investment Companies of April 16, 1957.

3

For the text of Arts, 10 and 11, and of the principles established pursuant to those Articles, see below, pp. 288-290 and 291-293.

4

It should be noted that in German the heading of Art. 15 reads Organkredite.

5

The requirement of formal approval under Art. 15(1) or 15(2) does not apply to credits granted to officers and employees, to their spouses and children under age, or to third parties acting on behalf of the said persons, if the credit does not exceed one month’s salary of the officer or employee (Art. 15(3)). Prior and/or subsequent approval of credits granted under Art. 15(1) or 15(2) is provided for under Art. 15(4) and 15(5). Art. 16 requires that Organkredite be reported to the Banking Supervisory Office.

6

Actually, Art. 19(1), item 2, provides for “the discounting of bills and checks.” It is, however, not clear whether the discounting of checks is legally permissible under the negotiable instruments law.

7

For the text of Art. 23, see below, p. 290.

8

For the text of Art. 24, see below, pp. 290-291.

9

The term Geltungsbereich, which is used in this and other provisions of the Law, is intended to indicate the territory in which the Law applies, i.e., presumably the territory of the Federal Republic of Germany and the Land Berlin; on the Berlin clause, see Art. 64.

10

For the text of Art. 10, see below, pp. 288-290.

11

For the text of Art. 11, see below, p. 290.

12

See Entscheidungen des Bundesverfassungsgerichts, vol. 14 (Tübingen, 1963), pp. 197-221. In particular, the Court held that the Banking Law did not imply a new administrative procedure for the authorities of the Länder, but merely terminated the administrative jurisdiction of the Länder in matters relating to bank supervision (pp. 219-220).

13

For the text of these principles, see Notice No. 1/62 below, pp. 291-293. The concept of “pledged capital resources” as referred to in those principles accords for the most part with the term haftendes Eigenkapital in Art. 10 of the Banking Law. Moreover, “capital resources” are enumerated among the long-term financial resources specified in Principle II.

14

For the text of these principles, see Notice No. 1/62 below, pp. 291-293.

15

Issued by the Federal Banking Supervisory Office on March 8, 1962 and amended by its Notice No. 1/64 of August 25, 1964. The amended version entered into force on January 1, 1965.

1

Gesetz über die Ausprägung von Scheidemünzen of July 8, 1950, as amended by a law of January 18, 1963. This Law is applicable in the Land Berlin as well as in the Federal Republic. In the version given here, the word Article (Art.) corresponds to the sign §. Also, the name Bank deutscher Länder has been replaced by the name Deutsche Bundesbank, in accordance with Art. 1 and item 1 of Art. 43(1) of the Law Concerning the Deutsche Bundesbank.

1

Gesetz über den Beitritt der Bundesrepublik Deutschland zu den Abkommen über den Internationalen Währungsfonds (International Monetary Fund) und über die Internationale Bank für Wiederaufbau und Entwicklung (International Bank for Reconstruction and Development) of July 28, 1952, as amended through July 31, 1966. The Law was published in the Bundesgesetzblatt, 1952, Part II, p. 637 (August 1, 1952) and therefore entered into force on August 2, 1952. In the version published here, the word Article (Art.) corresponds to the German word Artikel.

2

Germany’s initial quota in the Fund, US$330 million, was increased to US$787.5 million with effect from September 15, 1959, and to US$1,200 million with effect from May 27, 1966 (pursuant to Resolutions of the Board of Governors of the Fund Nos. 14-3 and 20-7, respectively). Also, the Deutsche Bundesbank is a participant in the Fund’s General Arrangements to Borrow, for amounts not exceeding DM 4,000 million (equivalent to US$1 billion); see Appendix VI, below.

3

Art. 5 of the Law of July 12, 1956 concerning the International Finance Corporation and related matters (see the Bundesgesetzblatt, 1956, Part II, pp. 747-48) provides that the Governors of the Federal Republic of Germany for the Fund, and their Alternates, exercise their functions in agreement with the Federal Minister of Economics, and that the Executive Directors and their Alternates are subject to instructions from the Minister.

4

The Agreements entered into force on August 14, 1952, the day on which the instruments of acceptance were deposited with the Department of State in Washington, D.C.

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