Second—and more significantly—on April 7 1924, the Reichsbank decided to cap the total amount of credit it would extend to the private sector. It wouldn’t call back any existing debt, but it would extend new credit only as prior debts were paid off.162 This strict cap on new credit creation was painful for businesses in the short term, but it also meaningfully stabilized German inflation, which turned slightly negative in May 1924.163
