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The State Treaty between the FRG and the GDR on the Creation of a Monetary, Economic, and Social Union (May 18, 1990)

In order to regulate the conversion from a planned to a market economy, the governments of the GDR and the FRG negotiated a treaty on the creation of a monetary, economic, and social union. The treaty detailed the process of introducing the DM [Deutschmark], spelled out the provisions for monetary and economic union, and assured the preservation of social benefits.

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The High Contracting Parties,

Owing to the fact that a peaceful and democratic revolution took place in the German Democratic Republic in the autumn of 1989,

Resolved to achieve in freedom as soon as possible the unity of Germany within a European peace order,

Intending to introduce the social market economy in the German Democratic Republic as the basis for further economic and social development, with social compensation and social safeguards and responsibility towards the environment, and thereby constantly to improve the living and working conditions of its population,

Proceeding from the mutual desire to take an initial significant step through the establishment of a monetary, economic and social union towards national unity in accordance with Article 23 of the Basic Law of the Federal Republic of Germany as a contribution to European unification, taking into account that the external aspects of establishing unity are the subject of negotiations with the Governments of the French Republic, the Union of Soviet Socialist Republics, the United Kingdom of Great Britain and Northern Ireland and the United States of America,

Recognizing that the establishment of national unity is accompanied by the development of federal structures in the German Democratic Republic,

Realizing that the provisions of this Treaty are intended to safeguard the application of European Community law following the establishment of national unity,


ARTICLE 1: Subject of the Treaty
(1) The Contracting Parties shall establish a monetary, economic and social union.
(2) Starting on 1 July 1990 the Contracting Parties shall constitute a monetary union comprising a unified currency area and with the Deutsche Mark as the common currency. The Deutsche Bundesbank shall be the central bank in this currency area. The liabilities and claims expressed in Marks of the German Democratic Republic shall be converted into Deutsche Mark in accordance with this Treaty.
(3) The basis of the economic union shall be the social market economy as the common economic system of the two Contracting Parties. It shall be determined particularly by private ownership, competition, free pricing and, as a basic principle, complete freedom of movement of labour, capital, goods and services; this shall not preclude the legal admission of special forms of ownership providing for the participation of public authorities or other legal entities in trade and commerce as long as private legal entities are not subject to discrimination. It shall take into account the requirements of environmental protection.
(4) The social union together with the monetary and economic union shall form one entity. It shall be characterized in particular by a system of labour law that corresponds to the social market economy and a comprehensive system of social security based on merit and social justice.

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