THE CENTRAL BANK OF HUNGARY

 

Since its creation a hundred years ago, the Central Bank of Hungary has issued two types of currency in the form of banknotes and coins: the pengo, which 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 modernisation. The 100 years of history are recalled through the banknotes and coins in the Money Museum.

After the First World War, rising inflation led to a gradual deterioration of the korona (the money used at the time), while gold reserves also declined. The monetary deterioration accelerated to such an extent that by mid-1924 it was clear that the crisis could only be overcome with external help. Financial help, a loan of 250 million gold crowns, came from the League of Nations, and an advance of £4 million from the Bank of England, which provided the precious metal backing needed for the new central bank, enabled the Central Bank of Hungary to be established in the June of 1924. The first president of the new institution was Sándor Popovics, a 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. The loan from the People's League succeeded in curbing inflation, and in 1925 the law introducing the new gold-based currency and the pengo was passed. The value of a pengo was 12,500 crowns, but from 25 August 1926 the higher denomination so-called crown state banknotes were put into circulation overprinted in pengo according to the conversion rate, because the MNB's banknotes for the new currency had not yet been produced.

Lajos Kossuth "announced" the name of the new Hungarian currency The choice of the name of the new currency was preceded by a heated debate, with the search for a name that had a tradition in Hungarian monetary history. Thus, the choice fell on the "pengo-forint", the name on the 1849 two-forint Kossuth banknote. The first pengo-denominated banknotes appeared in circulation at the end of 1926, in denominations of 5, 10, 20, 50 and 100 pengo. The 50 and 100 pengo notes bore the portraits of Ferenc Rákóczi II and King Mátyás respectively, the 5 pengo notes bore the portrait of István Széchenyi, the 10 pengo notes bore the portrait of Ferenc Deák, and the 20 pengo notes bore the portrait of Lajos Kossuth. The change of the new currency remained the old pengo. The first series of fillér was designed by Ferenc Helbing, while the 1,000 pengo banknote issued in 1927 was designed by Zoltán Egri. After the replacement of the first series of pengo banknotes, only one new banknote was put into circulation: a 10 pengo in 1936.

The territorial annexations between 1938 and 1941 - the southern part of the Highlands, Carpathia, Northern Transylvania, Bácska - required the central bank to print new banknotes to supply the affected parts of the country with cash. The 5 pengo banknotes survived for a year or two, before the 1 and 2 pengo coins, which were slowly being withdrawn from circulation, were replaced by paper notes of the same denomination.

The end of the pengo and the world record Although the Hungarian currency survived the Great Depression of 1929-33, the Second World War spared no one. The total damage amounted to 22 billion peace pengo, which represented about 40 percent of the national 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, we Hungarians topped the world rankings in the financial world: we set a record with the hyperinflation of the pengo in 1946. In just under a year, the value of our official currency at the time, the pengo, fell to 41 900 000 000 000 000th (41.9 trillionth) of its original value, which was a daily average of 207% inflation. The world's largest denomination of pengo ever issued is still held by the Hungarian state one billion billpengo banknote, equivalent to 1,000 trillion pengos.

The national currency we use today is almost eighty years old The pengo could no longer be saved, but thanks to the loyal and courageous employees on the Gold Train, using the approximately 30 tonnes of gold reserves of the Hungarian state, which had been exported and then brought back home, as collateral, a new national currency was introduced on the 1st of August in 1946: the gold-based forint.

To read the complete article, see:
The 100-year history of the Central Bank of Hungary showcased through banknotes and coins (https://www.penzmuzeum.hu/en/new/news/ime-a-100-eves-mnb-tortenete-bankjegyeken-es-ermeken-keresztul-2/)

The Money Museum of the National Bank of Hungary is a prime example of why it is worth rethinking the meaning of the word museum. The Money Museum not only presents old money and the history of money in a spectacular way – the experience offered by the exhibition is much more comprehensive and versatile. Visitors take a carefully constructed journey of discovery around the world of money, accompanied by interactive games and spectacular visual displays. The various tools, platforms, publications and events are all built around a common content and message. The Money Museum will thus become both a Hungarian stronghold of financial education and a prominent member of the international museum world.

For more information, see:
The Hungarian Money Museum (https://www.penzmuzeum.hu/en/)

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