West German Central Bank Gets Good Marks For Restoring Country's Economic Well-Being
FRANKFURT, West Germany -- Sandwiched between a couple of urban freeways and a state-subsidized housing settlement in one of this town's suburbs, the gray building looks more like a provincial hospital than a central bank.</br></br>But from this unassuming concrete structure, West Germany's Bundesbank has been dispensing economic medicine that has restored West Germany's economic health. Its monetary policies have brought inflation down to just over 2%, the lowest rate of all industrial nations. At the same time, economic activity has revived. Policies long advocated by the bank have produced a 3% growth rate, slightly faster than that of the U.S.</br></br>And its isolation from Bonn has given the Bundesbank immunity from the growing tax-evasion scandal called the Flick affair that has infected Chancellor Helmut Kohl's government.</br></br>Consequently, many West Germans see the central bank as a bastion of stability in an uncertain world. It has always had a high profile, addressing the public about issues beyond the bounds of monetary policy. But under its current president, Karl-Otto Poehl, its sense of independence has grown. Anyone who threatens its obligation to defend the Deutsche mark had better be ready for a serious confrontation with an organization that is used to winning.</br></br>"The Bundesbank is a very political institution," says Mr. Poehl. "It really makes policy, unlike most other central banks."