Abstract

Germany's Position in International Foreign Exchange Dealings: Strong Currency, Weak Business Location

Since the current stock-taking of foreign-exchange market operations by the Bank for International Settlements includes also those of the Deutsche Bundesbank for the first time, it allows a more accurate classification of the German position. Whilst disaggregated analyses testify to the strength of the D-mark as the second most important currency in foreign-exchange dealings, Germany’s rank as a business location rather is a more intermediate one among the countries competing as locations for doing business; this represents a conspicuous disparity. This contribution discusses four hypotheses in an attempt to find explanations for this weakness; the one suggesting deliberate reluctance in doing business is the least convincing among these hypotheses. Insufficient demand, regulatory impediments and weaknesses in bidders’ competitiveness, by contrast, represent more plausible explanations.