Criticism of the course followed by the Deutsche Bundesbank has been increasing recently. Professor Dr. Otmar Issing explains the theoretical concept of German monetary policy and the basic principles of the Bundesbank's monetary targeting.

During the turbulent 1970s and 1980s the Bundesbank established an outstanding reputation in the world of central banking. Germany achieved a high degree of domestic stability and provided safe haven for investors in times of turmoil in the international financial system. Eventually the...