Germany: Institutional independence and anchoring

German economic policy in the post–World War II era was shaped against the vivid memory of the hyperinflation of the 1920s and the monetary reform of 1948 that wiped out savings. Inflation was feared more than anything else. The Bundesbank, set up as an independent institution by the war powers, fought to maintain this independence in the mid-1950s, when the governing law was rewritten. As reported in 1957:

„President Vocke had incurred the Chancellor’s wrath because he pursued a monetary policy that paid scant attention to Konrad Adenauer’s amateurish ideas and politically dictated wishes… On such occasions Vocke demonstrated that the Chancellor’s power ceased to apply
at the gates of the central bank.“
(Der Spiegel, July 17,
1957, pp. 18–20)

Public support for an independent, inflation-fighting central bank ensured that the Bundesbank emerged from this political fight with legal and, more important, practical independence.