Treasury Today Country Profiles in association with Citi

Trillion euro debt finally catches up with Berlin (450 years later)

overdue notice

Spanish finance minister Luis de Guidos flew to Berlin earlier this week for crisis talks amid soaring borrowing costs. But according to Reuters, the German capital now has a considerable debt problem of its own to worry about.

An old outstanding certificate of debt recently found in a regional archive reveals that Mittenwalde, a small town located in eastern Germany, lent Berlin 400 guilders on 28th May 1562 – a sum which was to be repaid at a rate of 6% interest per year.

The debt, according to estimates, would be equivalent to roughly €112m today. After adjusting for compound interest and inflation the total figure would, it is claimed, be somewhere in the trillions.

Naturally, the town’s mayor Uwe Pfeiffer is intent on reclaiming the old debt from Berlin. But while experts have confirmed the certificate’s authenticity, the requests made by Mittenwalde have for the most part fallen on deaf ears. A small reimbursement has been made however. Recently, Berlin’s finance senator Ulrich Nussbaum met Pfeiffer to ceremonially present her with a historical guilder from the year 1539, reportedly worth up to €100,000.

But with the German capital already €63m in the red according to recent reports, Mittenwalde may have to wait yet another 450 years for the rest.

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  1. I was intrigued by the piece on Berlin's debt. Issuming (very unlikely) that the contract could be held to apply 6% compound interest the debt would be about 10 trillion guilders – but at what exchange rate would be payable? In 1912 compound interest would already have brought it up to 200 billion guilders, which after two currency unions would have been converted into Reichsmarks at about 3 to 1 - a great deal of money if it had been claimed then. Alas, since 1923 this claim is worthless - Mittenwalde was lucky to get their gold guilder! John Chown
    JFC's Gravatar

    JFC 2012-07-27 19:56:11