What happened
The Bundesbank, led by Karl Otto Pöhl, warned that converting East German wages and prices at 1:1 would make East German goods instantly uncompetitive — East German productivity was roughly a third of West German levels, but wages would now be priced as if it were not. Kohl overruled this advice for an election he needed to win in the East before December 1990.
The result was rapid: East German industrial output fell by more than 60% in the two years after reunification. Unemployment in the former East reached levels the West had not seen since the 1930s. The Treuhandanstalt, the agency tasked with privatising East German state industry, sold or liquidated thousands of firms at speed, with limited regard for regional employment.
The economic gap this created has never fully closed. Average East German wages, productivity, and wealth remain measurably behind the West more than three decades later. This is not incidental to German politics today — it is the single clearest predictor of AfD vote share. The party consistently polls twice as high in the East as in the West, in the same regions that absorbed the sharpest shock of Kohl\'s currency decision.