Author: Paweł Kowalewski

Economist, works at NBP, specialises in monetary policy issues and FX markets

A somewhat different look at the Bundesbank

The Bundesbank is most often associated with a conservative approach to central banking, significant levels of institutional independence, and a highly effective monetary policy.
A somewhat different look at the Bundesbank

(Foto: Bundesbank)

It is, therefore, a good time to take a look at the German central bank from an entirely different perspective. This will be facilitated by the Bundesbank’s recently released photo album, which presents the history of its Central Office.

Art is not a concept foreign to central banks. I’ve even recently heard someone say ironically that, due to the recent rise in inflation, central banks are in fact boosting demand for works of art. The point is that the latter are supposed to guarantee effective protection against money losing its value. I wouldn’t want to start a discussion on that, however, as the purpose of this article is completely different. Nevertheless, even if central banks are indeed generating demand for art, then at the same time these same central banks are also taking care of the numerous works of art held in the headquarters of these institutions.

One excellent example of a central bank supporting art is the Austrian central bank (OeNB), which holds an impressive collection of old musical instruments. But in a city so central to the history of European music, things couldn’t be any different.

On the other hand, the bank’s seat is located in a square whose patron is the famous Austrian architect Otto Wagner, while the building itself could certainly compete for the title of the most beautiful central bank headquarters in Europe. However, it isn’t at all clear that it would actually win, mainly due to the enormous competition. That’s obvious for anyone who has seen the headquarters of the central banks of Italy, France, Hungary and Spain. And how does the seat of Germany’s central bank stack up against them? One could just say that it represents a completely different, significantly lower league. All spitefulness aside, I’d rather say that it represents an entirely different world.

Indeed, the building of the Bundesbank’s headquarters, designed in the early 1960s and put into operation in 1972, clearly stands out from other central banks, both in terms of style and architectural solutions. At first glance, we see something vaguely similar to the famous wave-shaped blocks of flats (known in Polish as “falowiec”) located in Gdańsk’s Przymorze district. Well, the length of the building in question is 220 metres, while its width is less than 17 metres, and its height is approximately 54 metres. Even the employees of the Bundesbank themselves have explicitly described their employer’s seat as an ugly piece of architecture. Among my colleagues from work, I was probably the only person who actually admired the building, which the Germans saw as slightly pitiable. Up to a point though…

In 2016, the management of the Bundesbank decided to carry out a comprehensive renovation of its Central Office in order to give the building a new look. For obvious reasons, I’m not familiar with the details of these plans, so I don’t know what the Central Office will look like after the renovation. However, I assume that the changes will be significant. I became increasingly convinced of this following the release of the Bundesbank’s recent publication – a beautiful album entitled The Past Becomes the Future.

When I look at this album, I’m under the impression that the employees of the Bundesbank wanted to preserve their memories of an old building that is now doomed to become a thing of the past. Indeed, thanks to Nils Thies’ truly artistic photographs, the true beauty of this building has been shown and immortalized in its entirety.

To be honest, it’s hard to imagine better photographs, as the images presented in the album direct our attention to vital details. One such example is the main entrance hall designed by the world-renowned Venezuelan artist Jesus Rafael Soto in his own distinctive architectural style (those who have had the opportunity to visit the largest Venezuelan airport “Maiquetia” near Caracas certainly know what style that is).

My fascinations

Now I would like to address my own fascination with the Bundesbank’s headquarters. I certainly can’t claim to be an expert in the field of architecture, quite the opposite. My fascination with this edifice has entirely different origins. It was the result of my prior interest in the German mark, whose value was guarded by none other than the all-powerful Bundesbank. I certainly wasn’t the only one to be seduced by the myth of that strong currency.

The famous French economist, Jacques Attali, went even further in the course of his discussions with his German colleagues and referred to the German mark as Germany’s atomic bomb (which left his German partners deeply perplexed). Conscious of Attali’s words, while entering the Bundesbank’s Central Office I was under the impression that I was walking into a nuclear arsenal of sorts. However, those who have never heard of the “atomic bomb” metaphor may have had similar feelings as well. This is due to the fact that any person entering the Bundesbank building undergoes a thorough check performed by the security staff.

In other words, not everyone is allowed to simply walk into the German central bank’s headquarters. Meanwhile, those who do manage to find their way inside will only be able to explore the building to a minimal extent. I was lucky enough to have been able to work there for two years, which is long enough to truly get to know the nuclear arsenal in which Germany’s – financial – nuclear weapons were stored.

Walking through the long corridors of this building, I would often wonder whether my older colleagues used the same routes on the way to their meeting with the then-President Otmar Emminger, during which the famous “Emminger clause” was established.

Looking at the vast green areas surrounding the building, I would ask myself whether it was here that the helicopter with the then-Chancellor Helmut Schmidt landed on 30 November 1978. Or perhaps, whether in May 1991 Karl Otto Poehl (now considered a legend of central banking) was strolling along the winding paths in the beautiful park when he made the difficult decision to resign from such a prestigious office (in protest against the alleged monetary union between the Federal Republic of Germany and the German Democratic Republic at a parity rate of 1:1).

During the several times I visited the top floor of the building (occupied by the highest authorities of the Bundesbank), I couldn’t help but think that it was precisely on the same floor that a secret meeting of the German monetary authorities took place on 11 September 1992 (attended by Chancellor Helmut Kohl and Finance Minister Theo Waigel), during which the Bank’s President Helmut Schlesinger informed Kohl that the continued support for the Italian lira threatened the monetary stability of Germany.

And was it not on the same floor that Schlesinger had given the famous interview resulting in a massive sell-off of the British pound, which subsequently forced the United Kingdom to leave the ERM (Exchange Rate Mechanism)?

These kinds of thoughts accompanied me at every step. However, I don’t want to bore the readers with my personal fascination with the German central bank. After all, the purpose of this article is to present the building serving as the seat of the German Bundesbank as a historical monument of a certain kind. And the nearly 60-page-long introduction to the album is very helpful in this regard. The author, Werner Durth, a famous German architect and expert in the history of architecture, invites us to take a walk around the Bundesbank’s Central Office and explains the foundations for the architectural concept of the German central bank’s Central Office.

This description will help us to understand the special role of Frankfurt am Main, a city which almost became the capital of West Germany. From the text, one can find out why the capital of Germany was ultimately located in the quaint provincial town of Bonn. Of course, the Bundesbank was not actually created until 1957, but the disputes and discussions concerning the seat of its predecessor (i.e. Bank deutscher Laender) had taken place more than a year before the establishment of the Federal Republic of Germany itself. Bonn was not brought into play, while the Hanseatic city of Hamburg stood out as a serious rival to Frankfurt.

Initially, the seat of both the Bank deutscher Laender and later the Bundesbank was located in the former Reichsbank’s building at Taunusanlage 5. It was not until 1961 that the trio of German architects, Otto Apel, Hannsgeorg Beckert and Gilbert Becker, won the competition for the design of the bank’s headquarters. The architects formed a company whose name is an acronym derived from their surnames (ABB) and which became a highly renowned brand in Germany. This was especially thanks to Beckert, who worked on the designs for the Frankfurt opera and theatre.

The building was put into operation in 1972. Of course, this is certainly only a coincidence, but both of the aforementioned dates have their hidden symbolism. In 1961, the first revaluation of the German mark against the US dollar took place, which was a clear signal that war-damaged Germany was starting to regain the status of a serious player in the international currency system. In turn, in 1972, the Bretton Woods system was already in ruins and a new system was emerging in which West Germany began to play a significant role (not to mention its decisive role in Western Europe).

In the introduction, Durth himself draws attention to one particularly important detail. The architecture of the Bundesbank’s Central Office in a way pays tribute to a culture of stability. I would add – “a culture of monetary stability.” Indeed, the building itself is also finished in a very austere way, the best example of which is the lack of air conditioning throughout the entire building (except for the top floor, where the offices of the Executive Board are located). The furniture is very modest as well (also in the rooms occupied by the Executive Board). The only oasis of luxury in this case is the beautiful swimming pool (it’s a pity that Niels Thies didn’t depict it in the album), mainly due to its fabulous location (and, importantly, its pristine cleanliness).

What is the message behind this modesty? Every German mark (and now every euro) counts! There was no place – and there still isn’t any – for unnecessary luxury here. We should also add to that the Bundesbank mentality. The Bundesbank doesn’t offer its employees particularly high salaries (I would know something about that), but compensates for the comparatively lower earnings through the special relationship with its employees. The essence of that relationship is reflected in the following slogan: “With the Bundesbank from the cradle to the grave.”

There is no exaggeration in that claim, because the Bundesbank offers its employees both a kindergarten for their children, as well as all kinds of attractions for retired employees (including sponsored, but really delicious, dinners). Many Germans prefer such an employer-employee relationship to the higher salaries that can be obtained at Frankfurt’s other financial institutions.

And isn’t the above-mentioned mentality of the Bundesbank derived by any chance from the concept of a social market economy invented by Ludwig Erhard I remember how in the times of the debt crisis of 2010-2012, a Polish diplomat representing Poland in Greece described it as a poor country of very rich inhabitants.

After my stay in Germany, I left with the impression that Germany was, conversely, a very wealthy country of people who live very modestly. This comparison allows a better understanding of the reasoning behind this architectural object inspired by the “culture of monetary stability.” And who is supposed to promote and spread this culture, if not the employees of the Bundesbank? This approach also explains why the Germans were so shocked by the fact that the construction of the new ECB headquarters had exceeded the initial budget by as much as 50 percent.

Unfortunately, the authors of the album didn’t manage to avoid an  error. Between pages 23 and 25 we suddenly find one page printed in German. It seems that such a mistake shouldn’t have happened. But let’s recall that in the 25 years of conducting monetary policy (the aim of which was to control the growth rate of the M3 monetary aggregate), the Bundesbank actually missed its target more frequently (13 times in 25 years) than it successfully achieved it.

These were genuine setbacks, but they did not prevent the Bundesbank from gaining the highest respect both in Germany and abroad. The same is true for this error. One improperly printed page doesn’t in any way spoil the joy of viewing the photos. Plus, the album serves as a genuine confirmation that central banks promote art in various ways.

I also have good news for all those interested in the publication after reading this article. The Bundesbank offers the album free of charge, and all you have to do in order to receive it is to fill out a form available on the Bank’s website. It’s really worth it.

(Foto: Bundesbank)

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