Monitory policy in Germany Bundsbank and great inflation

Operating Procedure.
Despite the public focus on monetary aggregates, the daily management of the policy is concerned with the setting of short term market interest rates. Like many other central banks, the Bundesbank translates its main policy goals into near interest rate objectives. It in turn supplies bank reserves to meet these objectives. Even in its official publications, the Bundesbank states that, in the short run, moderating market interests rate fluctuation takes precedence over meeting monetary targets.
Until the mid-1980s, the Bundesbank manipulated short term market interest rates via discount window lending to commercial banks. It made available two of types credit: discount and Lombard. Banks could receive discount credit at preferred rate, up to fixed quota. To meet short term liquidity needs beyond the quota limit, they could obtain Lombar credit at a premium rate. Under normal circumstances, Lombard credit was generally available in elastic supply. In periods of tightening though, limits could also be placed on the use of this credit.
Both discount and Lombard rates are posted rates. The market rate that discount window lending most directly affects is the rate in the interbank market for reserves, known as the day to day rate and also as the call money rate. As in the U.S, reserve management policy is geared toward influencing the interbank rate. Short term variation in this rate therefore reflects the intention of monetary policy.
Since 1985 the Bundesbank has supplied banks with reserves mainly via repurchase agreements, which are essentially collateralized loans with a maturity of two to four weeks. Lombard credit has largely dried up. Nonetheless, the Bundesbank still posts a Lombard rate, mainly as a way to signal its intentions. Reserve management continues to directly influence the day-to-day rate, which still tends to fluctuate between the discount and Lombard rates. Further, the day-to-day rate also tends to move closely with the rate on repurchase agreements, known as the ‘’repo’’ rate. Despite the midstream change in operating procedures, therefore, it is still reasonable to view the day-to-day rate as the Bundesbank’s policy instrument for the full post-Bretton Woods era.