The Hungarian Forint’s Centuries of History
Posted on 1/22/2020
The Hungarian Forint has played a prominent role in the economy and history of the country and much of Europe for more than 700 years.
In fact, the Hungarian name comes from the Italian words fiorino d’oro, which translate to gold florin, the first gold coin struck in Europe.
These coins, which originated from Florence, Italy, became important to European trade as countries adopted it and struck their own Florins. Most of the coins were struck with gold from Hungary, where King Charles I, who ruled from 1308 to 1342, established the mines that provided most of the gold for all of Europe. Its supply of gold made Hungary, which started minting its own gold Forint in 1325, an important power in Europe for centuries.
The Forint was used in some form in Hungary even when parts of the country succumbed to different powers.
In 1754, the entire country came under the rule of the House of Austria. In 1867, in the aftermath of the Prussian War, Hungary became Austria-Hungary. But the Forint was used until 1892, when the new country was switched to the Austro-Hungarian Krone.
The Austro-Hungarian Krone was used from 1892 to 1918, when World War I resulted in the dissolution of Austria-Hungary. Hungary created a new Hungarian Korona but in the war’s aftermath severe inflation forced Hungary in 1927 to convert the Korona to the Pengő at a ratio of 12,500 to 1.
|Hungary began minting its own gold coin Forints in 1325 and continued using
the currency until 1892. It resumed using the currency in 1946.
Click image to enlarge.
The Pengő remained Hungary’s currency until after World War II when inflation again destroyed Hungary’s currency. But this time its effects were even more devastating: The Pengő’s hyperinflation topped out at a rate of 150,000 percent per day.
This inflation made it impossible to collect taxes, because collections were worth nothing the next day. Hungary adjusted its currency to display the Pengő with fewer zeros by issuing Milpengős, which were equivalent to 1 million pengős. The final Pengős series, called the B.-Pengő, indicated 1 trillion pengős. The largest note Hungary issued was for 100,000,000 B.-Pengős, or 100 quintillion Pengős.
In 1946, Hungary changed its currency back to the Forint. The exchange rate was 4 x 1029 to 1 Forint. Hungary still holds the record for the highest currency inflation.
|The largest note Hungary issued was for 100,000,000 B-Pengos,
or 100 quintillion Pengos.
Click image to enlarge.
The Forint has remained Hungary’s currency since 1946 and has proven to be much more stable than past currencies. Hungary’s Forint was even able to stay relatively stable though the country’s transition from Soviet influence in the late 20th Century.
Hungary joined the European Union in 2004. One of the steps necessary to become a full member of the union is to change its currency to the Euro. But although Hungary has said it plans to change its currency, it has not yet met certain criteria necessary to adopt the currency. Hungary’s government does not seem to be pursuing the change and has no definitive timeline for its adoption.
Considering Hungary’s history of inflation, the hesitation to switch from the Forint is perhaps understandable.