Emergency Money – Function, Issuer and Procedure
Emergency money is issued in times of economic crises. It is intended to remedy the lack of legal means of payment such as coins and banknotes. In the most important emergency money period in Germany lasting from 1914 to 1923, emergency money replaced and supplemented the coins and banknotes issued by the Reichsbank (imperial bank). A later but much smaller amount of emergency money was issued between 1947 and 1948.
The issuance of emergency money is often associated with economic or war-related crises. The war economy with a high demand for metals or even inflation could lead to a lack of cash. In the case of the calling-in of metals for the war economy, the raw materials for the production of coins were no longer sufficient. In the event of inflation, enormous amounts of cash were required which the central bank could no longer make available in sufficient quantities. Emergency money was issued for the maintenance of payment transactions in everyday life as well as for wages or daily needs.
Generally speaking, emergency money is a temporally and regionally limited means of payment. It is only valid within a certain location or district and for a certain period of time. This period is set by printing the date on the emergency money itself or it is announced that this will be declared separately.
In Germany, approval for the issuance of emergency money was obtained or granted only in some cases. In particular inflation meant that there was great time pressure exercised on the design, print and issuance of the notes. There was often no time left for the often complicated official approval procedures. The responsible central bank therefore simply tolerated the issuance of the emergency money.
With the increasing importance of paper money since the middle of the nineteenth century, more emergency money was also being spent. In Europe, this applied above all to WWI and WWII and to the interwar and post-war periods.