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PAGE 01 BONN 03941 161946 Z
63
ACTION EUR-25
INFO OCT-01 EA-11 ADP-00 AID-20 EB-11 NSC-10 RSC-01
CIEP-02 SAL-01 SS-14 STR-08 OMB-01 CEA-02 CIAE-00
COME-00 FRB-02 INR-09 NSAE-00 TRSE-00 XMB-07 OPIC-12
LAB-06 SIL-01 DODE-00 PM-09 H-02 L-03 PA-03 PRS-01
USIA-12 ABF-01 FSE-00 AGR-20 RSR-01 /196 W
--------------------- 075698
R 161757 Z MAR 73
FM AMEMBASSY BONN
TO SECSTATE WASHDC 3933
INFO AMEMBASSY BERN
AMEMBASSY BRUSSELS
AMEMBASSY COPENHAGEN
AMEMBASSY THE HAGUE
AMEMBASSY LONDON
AMEMBASSY PARIS
AMEMBASSY ROME
AMEMBASSY TOKYO
USMISSION EC BRUSSELS UNN
USMISSION OECD PARIS UNN
UNCLAS BONN 3941
DEPARTMENT PASS TREASURY AND FEDERAL RESERVE
E. O. 11652: N/ A
TAGS: EFIN, GW
SUBJECT: MONETARY DECISIONS OF FEDERAL CABINET
1. BEGIN SUMMARY: THE FOLLOWING IS AN INFORMAL TRANSLATION OF
A STATEMENT PUBLISHED BY THE FEDERAL PRESS OFFICE ON THE MARCH
14 DECIDISIONS OF THE FEDERAL CABINET TO REVALUE THE DEUTSCHEMARK,
TO MAINTAIN FIXED EXCHANGE RATES WITHIN A GROUP OF 6 EEC COUNTRIES,
AND TO LET THE CURRENCIES OF THESE COUNTRIES FLOAT AGAINST THE
CURRENCIES OF THE REST OF THE WORLD. END SUMMARY.
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PAGE 02 BONN 03941 161946 Z
2. BEGIN TRANSLATION: ON MARCH 14, THE FEDERAL CABINET HAS NOTED
WITH SATISFACTION THE RESULTS OF THE MONETARY CONFERENCES OF THE
RECENT DAYS. IT WAS PARTICULARLY PLEASED THAT A HEABY SET- BACK TO
EEC MONETARY INTEGRATION COULD BE PREVENTED. THE CLOSE AND GOOD
COOPERATION WITH ALL EEC PARTNERS AND THE U. S. CONSIDERABLY
FACILITATED THE SETTLEMENT OF THE LATEST MONETARY CRISES.
3. THE DEUTSCHE BUNDESBANK IS -- LIKE CENTRAL BANKS OF ALL OTHER
EEC COUNTRIES -- NO LONGER OBLIGED TO PURCHASE DOLLARS.
4. IN EUROPE, THE FRG TOGETHER WITH FRANCE, THE NETHERLANDS,
BELGIUM,
LUXEMBOURG AND DENMARK WILL ESTABLISH A BLOC OF IFIXED EXCHANGE
RATES
.
FOR THE CURRENCIES OF THESE COUNTRIES, THE MAXIMUM EXCHANGE RATE
MARGIN WILL, AS PREVIOUSLY, BE PLUS/ MINUS 2 1/4 PERCENT. THE
DEUTSCHE BUNDESBANK WILL GUARANTEE THIS BY INTERVENING ON EXCHANGE
MARKETS WITHIN THE SCOPE OF THE EEC INTERVENTION MECHANISM.
IT CAN BE EXPECTED THAT SEVERAL NON- EEC COUNTRIES WILL JOIN THIS
ARRANGEMENT.
5. AS CONTRIBUTION TO THE MAINTENANCE OF EXTERNAL ECONOMIC EQUIL-
IBRIUM, THE DEUTSCHEMARK WILL BE REVALUED BY 3 PERCENT. FOR THE
DOMESTIC ECONOMY, THE EXCHANGE RATE MEASURE WILL CONTRIBUTE TO
THE
DAMPENING OF BOTH THE ACCELERATING RATE OF ECONOMIC GROWTH AND
PRICES.
6. EFFECTIVE MARCH 19,1973, THE CENTRAL RATE OF THE DM WILL BE
1 DM - 0.294 389 SDR( SPECIAL DRWAING RIGHT).
THUS, THE CENTRAL RATE IS FOR THE FIRST TIME FIXED IN SDR' S.
7. THE FOLLOWING EXCHANGE RATE RELATIONS RESULT FROM THIS MEASURE:
100 FF - PREVIOUSLY DM 62,9924, NOW DM 61,1585
100 HFL - PREVIOUSLY DM 99,3158, NOW DM 96,4245
100 BFR - PREVIOUSLY DM 7,1905, NOW DM 6,9812
100 DKR - PREVIOUSLY DM 46,1676, NOW DM 44,8322.
8. UNDER THE CIRCUMSATANCES, THE SOLUTION ACHIEVED MUST BE CON-
SIDERED TO BE AN OPTIMAL ONE: FOR EUROPEAN POLICY WITHIN THE
WIDER SCOPE OF OUR FOREIGN RELATIONS AND FROM THE POINT OF VIEW
OF OUR OWN DOMESTIC ECONOMIC POLICY. END TRANSLATION. HILLENBRAND
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*** Current Handling Restrictions *** n/a
*** Current Classification *** UNCLASSIFIED