ntain a "strong" D-Mark.
The power of the D-Mark to hold or appreciate its value against other currencies, even in the face of severe economic pressures, was aptly demonstrated in 1990-92, when it appreciated five percent, on a trade-weighted basis, against a "basket" of all other currencies. (By trade-weighting it is meant that the behavior of each other country's currency relative to the D-Mark is factored in to the overall result in proportion to the share that country has of German trade.)
With the fall of the Berlin Wall and the reunification of Germany, the newly unified German economy faced enormous short-term strains, but gained a long-term potential to become even more of a driving engine in the European economy. These conditions further emphasized the challenges which the D-Mark posed to other European currencies. Faced with the task of rebuilding the former East German economy, inflationary pressures were inevitable, and the Deutsche Bundesbank, the German central bank, became all the more determined to preserve the strength of the D-Mark.
Its success, as we have noted, was formidable, as the D-Mark actually increased its trade-weighted relative value. This demonstration of the short-term energy of the Deutsche Bundesbank (DB), the increased prospective weight of the German economy within the European Union--and, perhaps, lingering uncertainty about the place of the new Germany in the new Europe, were very probably among the factors which caused Maastricht to fail.
But if the failure of Maastricht represented a collective drawing-back by Europe from a specific plan of integration, it has not turned back the clock, or even stopped it. Instead, the integrative process has gone forward on a contingent, ad-hoc basis. What Elfriede Regelsberger called the "pragmatic evolutionary" model of further European integration has been followed in practice, embodying "a limited widening and incremental deepening" ...