This research determines the extent to which Germany's adoption of the euro was a logical next step in the evolution of central banking in general since WWII. I evaluate the significance of the political economics of monetary integration from the perspective of the Bundesbank and the West German government. Moreover, I model a modified Taylor Rule to asses the evolution of the Bundesbank's monetary policy between 1960 and 1998. Finally, I demonstrate that the adoption of the euro was the logical next step in the evolution of the Bundesbank's monetary policy.; Germany had a central role in the process of monetary integration in Europe, and the German domestic policy making was the primary driving force behind the EMU from 1960 forward. The Bundesbank and the Finance Ministry preferred a gradual approach to monetary integration because they wanted to assure that member nations adopted price stability as their primary objective.; The modified Taylor Rule serves as a reliable benchmark of the Bundesbank's monetary policy. I estimate multiple reaction functions to assess the evolution of the Bundesbank's monetary policy.; Finally, I test for similarities in the de facto monetary policy objectives of the Bundesbank and the ECB. (Abstract shortened by UMI.)
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