From the crisis of the 1930s to the Second World War

After the dissolution of the Austro–Hungarian Monarchy, Hungary had to establish its own independent monetary policy. As a first step, an independent central bank had to be established, and this led to the foundation of the Magyar Nemzeti Bank in 1924. MNB had a key role in the post-war stabilisation of the economy; it was active in obtaining foreign loans, but its most important achievement was definitely the introduction of the new gold-based and stable domestic currency, the pengő.

The young and still vulnerable Hungarian economy and its financial system were hit by the Great Depression of 1929 to 1933, which fundamentally shook the centuries-old banking systems of developed countries. The experts of the MNB intervened fast to avoid a collapse and insolvency, and the introduction of a fixed foreign exchange management scheme was successful in preventing the immediate threat and preserving the country’s solvency. However, as a result, the pengő and its successor, the forint, were not freely convertible to other currencies, i.e. our domestic currency was not convertible until 2001.