London Agreement on German External Debts

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Hermann Josef Abs signing the London Agreement on German External Debts on February 27, 1953.

The London Agreement on German External Debts, also known as the London Debt Agreement (German: Londoner Schuldenabkommen), was a debt relief treaty between the Federal Republic of Germany and creditor nations. The Agreement was signed in London on February 27, 1953, and came into force on September 16, 1953.[1]


The Conference on German External Debts (also known as the London Debt Conference) was held between February 28, 1952 and August 28, 1952.[1] The Agreement reached at the Conference was signed in London on February 27, 1953.[1] The Agreement was ratified by the United States, France and United Kingdom on September 16, 1953, at which point the agreement came into force.[1]

The London Debt Agreement covered a number of different types of German debt from before and after the Second World War. Some of them arose directly out of the efforts to finance the reparations system, while others reflect extensive lending, mostly by U.S. investors to German firms and governments.[2] The parties that were involved besides West Germany included Australia,[3] Belgium, Canada, Denmark, France, Great Britain, Greece, Iran, Ireland, Italy, Liechtenstein, Luxembourg, Norway, Pakistan, Spain, Sweden, Switzerland, South Africa, the United States, Yugoslavia and others. The states of the Eastern Bloc were not involved.

The total under negotiation was 16 billion marks of debt resulting from the Treaty of Versailles after World War I which had not been paid in the 1930s, but which Germany decided to repay to restore its reputation. This money was owed to government and private banks in the U.S., France and Britain. Another 16 billion marks represented postwar loans by the U.S. Under the London Agreement, the repayable amount was reduced by 50% to about 15 billion marks and stretched out over 30 years, and compared to the fast-growing German economy were of minor impact.[4] An important term of the agreement was that repayments were only due while West Germany ran a trade surplus, and that repayments were limited to 3% of export earnings. This gave Germany’s creditors a powerful incentive to import German goods, assisting reconstruction.[5]

Part of the agreement concerned debts to be paid after the reunification of Germany. For many decades this seemed unlikely to transpire, but in 1990 Deutsche Mark 239.4 million in deferred interest became due. These claims were repaid by means of "Fundierungsschuldverschreibungen" (Funding Debt Securities) with a maturity of 20 years. On 3 October 2010 the final payment, Euro 69.9 million, was made on these bonds. This marked the last payment by Germany on known debts resulting from both world wars.[6]


The agreement significantly contributed to the growth of the post-war German economy and reemergence of Germany as a world economic power. A 2018 study in the European Review of Economic History showed that the London Agreement "spurred economic growth in three main ways: creating fiscal space for public investment; lowering costs of borrowing; and stabilising inflation."[7] It allowed Germany to enter international economic institutions such as the World Bank and the International Monetary Fund.

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  1. ^ a b c d "One Made it Out of the Debt Trap Lessons from the London Debt Agreement of 1953 for Current Debt Crises" (PDF).
  2. ^ Osmańczyk 2003, p. 797
  3. ^ "Agreement on German External Debts. ATS 17 of 1954." Australasian Legal Information Institute, Australian Treaty Series. Retrieved on 15 April 2017
  4. ^ Guinnane, Timothy W. (July 2015). "Financial Vergangenheitsbewältigung: The 1953 London Debt Agreement". Yale University Economic Growth Center Discussion Paper No. 880. SSRN 493802.
  5. ^ Heather Stewart (18 January 2015). "A new idea steals across Europe - should Greece's debt be forgiven?". The Observer. Retrieved 25 January 2015.
  6. ^ "Deutschland hat keine Kriegsschulden mehr (Germany has no more War Debt)" (in German). Stern. 3 October 2010.
  7. ^ Galofré-Vilà, Gregori; Meissner, Christopher M.; McKee, Martin; Stuckler, David (2019). "The economic consequences of the 1953 London Debt Agreement". European Review of Economic History. 23: 1–29. doi:10.1093/ereh/hey010.


  • Osmańczyk, Edmund Jan; Anthony Mango (2003). Encyclopedia of the United Nations and International Agreements: G to M (2003 ed.). Taylor & Francis. ISBN 978-0-415-93922-5.
  • Guinnane, Timothy W. (July 2015). "Financial Vergangenheitsbewältigung: The 1953 London Debt Agreement". Yale University Economic Growth Center Discussion Paper No. 880. SSRN 493802.
  • Rombeck-Jaschinski, Ursula (2005), Das Londoner Schuldenabkommen: die Regelung der deutschen Auslandsschulden nach dem Zweiten Weltkrieg (in German and English), Oldenbourg: Deutsches Historisches Institut London, ISBN 9783486575804, Originally presented as the author's habilitation (Düsseldorf) under the title: Der Weg zum Londoner Schuldenabkommen. Die Regelung der deutschen Auslandsschulden nach dem Zweiten Weltkrieg.

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