German currency leaves its mark across the Balkans

Technically part of the euro, the mark remains popular at home and elsewhere.

International peace-keepers had barely arrived in Kosovo last June, when entrepreneurs in the regional capital, Pristina, started reopening their shops. I was not particularly surprised to see that the prices were all in German marks, since the mark is the currency of choice in the poorhouse of Europe.

Only when I received exact change in 10- and 5-pfennig coins - and not in the customary handful of Turkish bubblegum - was it clear how firmly the German currency had set foot in the Balkans.

Technically, the German mark no longer exists. It was one of 11 European Union currencies that officially became denominations of the euro as of Jan. 1, 1999.

But euro bank notes and coins are not due to begin circulating until 2002. Thanks to Germany's central geographic location, its economic might, and the presence of millions of foreign workers sending money home, the mark - not the dollar - is king in many parts of Europe.

The Bundesbank, Germany's central bank, estimates that 40 percent of all marks are circulating abroad.

In November, the government of Montenegro, Serbia's restive junior partner in what remains of Yugoslavia, introduced the German mark as legal tender in what was seen as a step toward establishing its own currency, unimaginatively dubbed the "marka."

In Bosnia, the currency is the "convertible mark," pegged one-to-one to the German mark. And in Kosovo, the German mark jingles from hand to hand even in its smallest denominations.

The most steadfast fans of the deutsche mark, not surprisingly, are the Germans themselves, who continue to view the euro with skepticism.

On Monday, the European common currency dropped to a record low of less than 94 cents against the dollar, but had recovered to trade at about 97 cents yesterday.

A German opinion poll at the end of last year showed that only 29 percent of respondents still had confidence in the euro, while 43 percent had always been concerned about the euro's devaluation. Germans' attachment to their currency is understandable.

In the years following World War I, the mark plunged to a trillionth of its pre-war value. After World War II, West Germany did not manage to pull itself out of a black-market economy until the introduction of the deutsche mark in 1948.

The currency soon became the symbol of West Germany's economic miracle." The mark is associated with [Germany's] longest period of relative stability in the 20th century," says Carl-Ludwig Holtfrerich, an economics professor at Berlin's Free University. "The two inflationary periods were traumatic experiences for the citizens of Germany."

When the country reunited in 1990, some cynics claimed that East Germans' longing for unification was really about getting the mark. At one demonstration 10 years ago, East Germans could be seen holding a sign reading: "If the D-mark doesn't come to us, we'll go to her."

Polls have shown that eastern Germans are especially wary of switching to the common currency. Yet economists generally welcome the euro.

Mr. Holtfrerich says that monetary union increases Germany's competitiveness, as exporters no longer are held hostage to the vagaries of the currency markets.

Herman Brodie, a currency analyst with Deutsche Bank in Frankfurt, recalls that the German mark made a similar slip against the dollar two years ago.

News that the mark is more popular than ever in the Balkans causes little concern in Germany. "I don't see any fundamental concerns for monetary policy if the mark were to be used elsewhere," says Ernst Welteke, the Bundesbank president.

Few people in the Balkans have had the luxury to start worrying about the euro, if they've even heard of it. Only one Belgrade moneychanger I met seemed to understand that the mark was a thing of the past. Every time I saw him, he would ask plaintively: "Got dollars?"

Of course I didn't. I had marks.

(c) Copyright 2000. The Christian Science Publishing Society

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