MNB Centenary: History with Banknotes and Coins

Since its creation a hundred years ago, the National Bank of Hungary (MNB) has issued two types of currency in the form of banknotes and coins: the pengő, which has had a short but memorable life of just twenty years, and the forint, which is still in use today. Both have been repeatedly renewed, sometimes out of necessity, sometimes for security reasons or for modernization. Eszter Hergár and Magdolna Katus, both of MNB, recall on the website of the National Bank of Hungary the 100 years of history through the banknotes and coins preserved in the Money Museum.

After the First World War, rising inflation led to the gradual deterioration of the Hungarian currency, the korona (‘crown’), while gold reserves also dwindled. The deterioration of the currency accelerated to such an extent that by mid-1924, it became clear that the crisis could only be overcome with external help. Financial help, a loan of 250 million gold crowns from the League of Nations, and an advance of GBP 4 million from the Bank of England, which provided the necessary precious metal backing for the new central bank, created a new financial framework. Thus, the Hungarian National Bank could be established in June 1924. The first president of the new institution was Sándor Popovics, Doctor of Law, who had previously served as Minister of Finance and then President of the State Institute of Legal Affairs, and was a member of the Hungarian Academy of Sciences.

Inflation was brought under control by the loan from the People's League, and in 1925, the law on the introduction of the new gold-based currency and the pengő value was passed.

Although the Hungarian currency managed to survive the Great Depression of 1929-33, the Second World War spared no one and nothing. The total damage amounted to 22 billion pengős, which represented about 40% of the nation’s wealth. By the end of the Second World War, inflation in Hungary had again reached significant proportions, and this time it was impossible to contain it. For a long time, Hungary topped the world rankings in the financial world, having set a record with the hyperinflation of the pengő in 1946. In just under a year, the value of the pengő, the country’s official currency at the time, fell to 41,900,000,000,000,000 (or 41.9 trillion), which represented a daily average devaluation of 207%. The world's largest denomination of pengő ever issued is still held by the Hungarian state with banknotes of one billion billpengős, equivalent to 1,000 trillion pengős (see picture).

The pengő could no longer be saved, but thanks to the loyal and courageous employees of the Gold Train, using the approximately 30 tons of gold reserves of the Hungarian State, which had been expatriated and then brought back home, as collateral, a new national currency was introduced on August 1, 1946: the gold-backed forint. One Hungarian forint (HUF) was equivalent to 0.075 grams of fine gold while its change money was fillér (HUF 1 = 100 fillérs).