To explain to those unfamiliar with the history, because of World War I, the Germans replaced their gold-backed currency with a fiat currency, the Papiermark. After the war, in the ensuing International depression, caused by staggering reparations, the Papiermark experienced hyperinflation.
There was a two-stage method used to restore their currency.
First, a gold-backed currency was introduced, called the Rentenmark, which was just for bank and government use. Because it was gold-backed, it was entirely stable, so with the equivalent of pennies, it could overcome many billions of Papiermark debt.
This stabilized the situation in a hurry. But then a new “street” currency, also backed with gold, the Reichsmark, was introduced. It was also very stable, and was able to completely replace the Papiermark, and was so effective as a currency that even the Nazis did not mess with it, and it remained through World War II.
The Nazis did try other bad economic stunts, like fixing prices and wages, which created an enormous black market.
Only in 1948 was it replaced with the Deutschmark. After all the chaos and destruction, the Reichsmark was exchanged for the Deutschmark at a mere 10 to 1 ratio, an exchange rate ordered by the western occupation forces.
This persuaded the German people that gold is essential to having a stable economy, and for personal protection from government and war. The German government, however, afraid of Soviet conquest and the theft of their gold, stored much of it in Britain and the US.
After the end of the Cold War, this was a policy that needs rethinking.
How was the Reichsmark backed with gold? Could you exchange Reichsmarks for gold in a bank?
I do know they minted silver Reichsmarks which were in common circulation. I assumed that had a lot to do with people's willingness to attribute value to the Reichsmark.
I know that West Germany also produced and circulated silver 5 mark pieces until the 1970s.