The pengő (; sometimes spelled as ''pengo'' or ''pengoe'' in English) was the
currency
A currency is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general definition is that a currency is a ''system of money'' in common use within a specific envi ...
of
Hungary
Hungary is a landlocked country in Central Europe. Spanning much of the Pannonian Basin, Carpathian Basin, it is bordered by Slovakia to the north, Ukraine to the northeast, Romania to the east and southeast, Serbia to the south, Croatia and ...
between 1 January 1927, when it replaced the
korona, and 31 July 1946, when it was replaced by
the forint. The pengő was subdivided into 100
fillér. Although the introduction of the pengő was part of a post-
World War I
World War I or the First World War (28 July 1914 – 11 November 1918), also known as the Great War, was a World war, global conflict between two coalitions: the Allies of World War I, Allies (or Entente) and the Central Powers. Fighting to ...
stabilisation program, the currency survived for only 20 years and experienced the most extreme
hyperinflation
In economics, hyperinflation is a very high and typically accelerating inflation. It quickly erodes the real versus nominal value (economics), real value of the local currency, as the prices of all goods increase. This causes people to minimiz ...
ever recorded.
Name
The Hungarian
participle
In linguistics, a participle (; abbr. ) is a nonfinite verb form that has some of the characteristics and functions of both verbs and adjectives. More narrowly, ''participle'' has been defined as "a word derived from a verb and used as an adject ...
''pengő'' means 'ringing' (which in turn derives from the verb ''peng'', an
onomatopoeic word equivalent to English 'ring') and was used from the 15th to the 17th century to refer to silver coins making a ringing sound when struck on a hard surface, thus indicating their precious metal content. (The onomatopoeic word used for gold coins is ''csengő'', an equivalent of English 'clinking' meaning a sharper sound; the participle used for copper coins is ''kongó'' meaning a deep pealing sound.) After the introduction of
paper money of the Austro-Hungarian gulden () in Hungary, the term ''pengő forint'' was used to refer to
forint coins literally meaning 'ringing forint', figuratively meaning 'silver forint' or 'hard currency'.
At the beginning of the First World War, precious metal coins were recalled from circulation. In the early 1920s, all coins disappeared because of the heavy inflation of the Hungarian korona. The name ''pengő'' was probably chosen to suggest stability. However, there was some controversy when choosing the name of the new currency, though the majority agreed that a Hungarian name should be chosen. Proposals included ''
turul'' (a bird from Hungarian mythology), ''turán'' (from the geographical name and ideological term
Turan
Turan (; ; , , ) is a historical region in Central Asia. The term is of Iranian origin and may refer to a particular prehistoric human settlement, a historic geographical region, or a culture. The original Turanians were an Iranian tribe of th ...
), ''libertás'' (the colloquial name of the
poltura coins issued by
Francis II Rákóczi), and ''máriás'' (the colloquial name of coins depicting
Mary, patroness of Hungary).
The denomination of the banknotes was indicated in the languages of ethnicities living in the territory of Hungary. The name of the currency was translated as follows: ''Pengö'' (
''Pengö'') in
German
German(s) may refer to:
* Germany, the country of the Germans and German things
**Germania (Roman era)
* Germans, citizens of Germany, people of German ancestry, or native speakers of the German language
** For citizenship in Germany, see also Ge ...
, ''pengő'' ( ''pengi'') in
Slovak, пенгов ( пенгова) in Cyrillic script
Serbo-Croatian
Serbo-Croatian ( / ), also known as Bosnian-Croatian-Montenegrin-Serbian (BCMS), is a South Slavic language and the primary language of Serbia, Croatia, Bosnia and Herzegovina, and Montenegro. It is a pluricentric language with four mutually i ...
, пенгыв ( пенгывов, later пенге) in
Rusyn, and ''pengő'' ( ''pengei'', later ''penghei'') in
Romanian. Later ''pengov'' ( ''pengova''), the Latin script
Serbo-Croatian
Serbo-Croatian ( / ), also known as Bosnian-Croatian-Montenegrin-Serbian (BCMS), is a South Slavic language and the primary language of Serbia, Croatia, Bosnia and Herzegovina, and Montenegro. It is a pluricentric language with four mutually i ...
version was also added.
The symbol of the pengő was a capital P placed after the numerals and it was divided into 100 fillér (symbol: f.).
History
Introduction of the pengő
After the
First World War
World War I or the First World War (28 July 1914 – 11 November 1918), also known as the Great War, was a World war, global conflict between two coalitions: the Allies of World War I, Allies (or Entente) and the Central Powers. Fighting to ...
, according to article 206 of the
Treaty of Saint-Germain, the
Austro-Hungarian Bank
The Austro-Hungarian Bank (, , , , , , ) was the central bank of the Habsburg Monarchy in the 19th and early 20th centuries.
The institution was founded in 1816 as the privilegirte oesterreichische National-Bank (), and changed its name in 1878 ...
had to be liquidated and the
Austro-Hungarian krone
The krone (alternatively crown; , , , , , , , , , ) was the official currency of Austria-Hungary from 1892 (when it replaced the Austro-Hungarian gulden, gulden as part of the adoption of the gold standard) until the dissolution of the empire in ...
had to be replaced with a different currency, which in the case of Hungary was the
Hungarian korona. This currency suffered a high rate of inflation during the early 1920s. A stabilisation program covered by a
League of Nations
The League of Nations (LN or LoN; , SdN) was the first worldwide intergovernmental organisation whose principal mission was to maintain world peace. It was founded on 10 January 1920 by the Paris Peace Conference (1919–1920), Paris Peace ...
loan helped bring down inflation, and the korona was replaced on 1 January 1927 by a new currency, the ''pengő'', which was introduced by Act XXXV of 1925. It was valued at 12,500 korona, and defined as 3,800 to one kilogram of fine
gold
Gold is a chemical element; it has chemical symbol Au (from Latin ) and atomic number 79. In its pure form, it is a brightness, bright, slightly orange-yellow, dense, soft, malleable, and ductile metal. Chemically, gold is a transition metal ...
– which meant that the pengő was pegged to the
gold standard
A gold standard is a backed currency, monetary system in which the standard economics, economic unit of account is based on a fixed quantity of gold. The gold standard was the basis for the international monetary system from the 1870s to the ...
, but was not
convertible
A convertible or cabriolet () is a Car, passenger car that can be driven with or without a roof in place. The methods of retracting and storing the roof vary across eras and manufacturers.
A convertible car's design allows an open-air drivin ...
to gold. In the beginning the cover ratio (which included gold and – up to 50% – foreign exchange) was fixed at 20%, but this had to be raised to 33.3% within five years. This goal was reached quickly: the cover ratio was 51% on 31 July 1930. Later it decreased somewhat due to the economic and financial crisis caused by the
Great Depression
The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty, drastic reductions in industrial production and international trade, and widespread bank and ...
. Until then the pengő was the most stable currency of the region.
World War II
The war caused enormous costs and, later, even higher losses to the relatively small and open Hungarian economy. The national bank was practically under government control, and the issue of money was proportional to budgetary demands. By this time, silver coins disappeared from circulation, and, later, even bronze and cupro-nickel coins were replaced by coins made of cheaper metal. In one of the last acts of World War II, the Szálasi government took control of banknote printing and issued notes without any cover, first in Budapest, then in Veszprém when Budapest had to be evacuated. The occupying Soviet army issued its own military money according to the
Hague Conventions.
Hyperinflation
The pengő lost value dramatically after
World War II
World War II or the Second World War (1 September 1939 – 2 September 1945) was a World war, global conflict between two coalitions: the Allies of World War II, Allies and the Axis powers. World War II by country, Nearly all of the wo ...
, suffering the highest rate of
hyperinflation
In economics, hyperinflation is a very high and typically accelerating inflation. It quickly erodes the real versus nominal value (economics), real value of the local currency, as the prices of all goods increase. This causes people to minimiz ...
ever recorded in human history. There were several attempts to slow it down, such as a 75%
capital levy in December 1945. However, this did not stop the hyperinflation, and prices continued spiraling out of control, with ever-higher denominations introduced. The denominations ''milpengő'' (one million pengő) and ''bilpengő'' (short: ''b.-pengő'', one
trillion
''Trillion'' is a number with two distinct definitions:
*1,000,000,000,000, i.e. one million 1,000,000, million, or (ten to the twelfth Exponentiation, power), as defined on the long and short scales, short scale. This is now the meaning in bot ...
() P) were used to simplify calculations, cut down the number of zeros and enable the reuse of banknote designs with only the colour and denomination name changed.
The hyperinflation was so out of control that at one stage it took about 15 hours for prices to double and about four days for the pengő to lose 90% of its original value.
Adópengő
The Hungarian government introduced the adópengő () on 1 January 1946, originally as an
indexed unit of account for budget planning: the idea was that by setting the value of the adópengő in terms of regular pengős every day, the adópengő would try to protect the government budget from the effects of hyperinflation.
The value of the adópengő in terms of regular pengős started at par, but the rate declined to 630 pengős by 1 May 1946, and then two sextillion pengős ( = 1,000 billion billion) by 31 July the same year.
On 29 May 1946,
Ferenc Gordon (then
Minister of Finance
A ministry of finance is a ministry or other government agency in charge of government finance, fiscal policy, and financial regulation. It is headed by a finance minister, an executive or cabinet position .
A ministry of finance's portfolio ...
) started issuing adópengő
tax bills,
and on 9 July the same year, the tax bills became legal tender. According to William Bomberger and Gail Makinen in October 1983, the issuance of the tax bills escalated the hyperinflation that eventually affected both regular pengős and adópengős — but the adópengő nevertheless forced the regular pengő into disuse as prices expressed in the latter became unbearable.
End of the pengő
On 11 July 1946, the Hungarian National Bank released the last pengő banknotes, for 100 million B-pengős ( = 100 quintillion); the Bank also printed banknotes for one billion B-pengős ( = one sextillion), but they never entered circulation.
The last adópengő banknote, for adópengős, followed on 25 July, and was equal to 200 octillion pengős ( = 200 billion billion billion) on 31 July.
Ultimately, only a new currency could stabilize the country's financial situation. On 1 August 1946, Hungary reintroduced the
forint at a ratio of 400
octillion pengős to 1 ( = 400 billion billion billion), dropping 29 zeroes from the old currency, or adópengős to 1.
According to Bomberger and Makinen, the circulation of regular pengő notes peaked at around 76 septillion pengős ( = 76 million billion billion) on 15 July 1946.
The conversion rate therefore reduced the peak value of all circulating pengő notes to 0.019 filler ( forint), allowing the Hungarian National Bank to start over without having to redeem regular pengő notes.
By contrast, the largest
tax bill in circulation ( adópengős) was worth 50 fillérs each, and remained in circulation for a short time after the reform.
The reform also attempted to reduce the risk of hyperinflation on the forint, by setting the exchange rate for gold at 13.21 forints per gram:
however, nobody could convert forints at that rate.
Coins

In 1926, coins of 1, 2, 10, 20 and 50 fillér and 1 P were introduced. The 1f and 2f pieces were bronze, the 10f, 20f and 50f were cupro-nickel and the 1 P coins were 64% silver. In 1929, 2 P coins were introduced, also in 64% silver. Commemorative 2 P and 5 P coins were also issued on anniversaries, with a non-commemorative 5 P coin issued in 1939.
During the Second World War, the 1 f. coin ceased production, the 2 f. coins were issued in steel and then zinc, the 10 f. and 20 f. coins were minted in steel and the 1 P, 2 P and 5 P pieces were struck in aluminium.
In 1945, the provisional government introduced new aluminium 5 P coins, the last issued before the hyperinflation.
Paper money
The Hungarian National Bank issued the first series of 5 P, 10 P, 20 P, 50 P, 100 P banknotes in the last days of 1926. These were offset prints on watermarked paper (except for the 5 P note). The banknotes featured notable Hungarian people on the obverse and either different locations in Budapest or paintings on the reverse; the banknotes also served educational purposes.

A new series of banknotes soon had to be printed to meet higher security standards. The engravings were executed and designed by Endre Horváth, a Hungarian graphic artist. New 5 P, 10 P, 20 P, 50 P and 100 P pengő notes were printed and a 1000 P banknote was added to this series — however, the latter had such a high value that it was rarely used except for large cash transactions between businesses and banks. This new series had almost the same features as the previous ones. 5 P notes were soon replaced with silver coins.

After the Vienna Award, Hungary had to supply its recovered territories with money. Since increasing the amount of silver coins would have been too expensive, 1 P and 5 P notes were issued in 1941 and 1938, respectively. These notes were of simple design and poor quality. Meanwhile, a series of new banknotes including 2 P, 5 P, 10 P and 20 P denominations was issued. The designs represented ornaments based on Hungarian folk art and people.
At the end of the Second World War, the Szálasi government and the occupying Soviet army issued provisional notes in the territories under their power, exacerbating inflation.

In 1945 and 1946, hyperinflation caused the issuance of notes up to 100 million b.-P (100
quintillion
Depending on context (e.g. language, culture, region), some large numbers have names that allow for describing large quantities in a textual form; not mathematical. For very large values, the text is generally shorter than a decimal numeric repres ...
or 10
20 P). During the period of hyperinflation, note designs were reused, changing the colour and replacing the word pengő with first milpengő, then
b.-pengő, to generate higher denominations. The largest denomination produced was 100 million b.-P (100
quintillion
Depending on context (e.g. language, culture, region), some large numbers have names that allow for describing large quantities in a textual form; not mathematical. For very large values, the text is generally shorter than a decimal numeric repres ...
or 10
20 P). The note was initially worth about US$0.20. Notes of one
milliard
1,000,000,000 (one billion, short scale; one thousand million or one milliard, one yard, long scale) is the natural number following 999,999,999 and preceding 1,000,000,001. With a number, "billion" can be abbreviated as b, bil or bn.
In stan ...
b.-P (one
sextillion or 10
21 P) were printed but never issued.

The introduction of
adópengő was an attempt to limit inflation. It slowed inflation somewhat, but did not stop the depreciation of the currency. Bonds were issued by the Ministry of Finance in denominations between and adópengő. These simple design notes on low-quality paper became legal currency in the last months of the hyperinflation, almost completely replacing the pengő.
The enormous amount of paper consumed during the production of adópengő notes caused a shortage of good quality security paper; this hindered the production of forint banknotes.
Historical exchange rates
See also
*
Zimbabwean dollar
*
Brazilian cruzado
*
Venezuelan bolívar
The bolívar is the official currency of Venezuela. Named after the hero of South American independence Simón Bolívar, it was introduced by President Antonio Guzmán Blanco, Guzman Blanco via the monetary reform of 1879, before which the Vene ...
*
Hungarian National Bank
The Hungarian National Bank ( , MNB) is the central bank of Hungary and as such part of the European System of Central Banks (ESCB). It was established in 1924 as a successor entity of the Austro-Hungarian Bank, under the economic assistance ...
*
Hyperinflation
In economics, hyperinflation is a very high and typically accelerating inflation. It quickly erodes the real versus nominal value (economics), real value of the local currency, as the prices of all goods increase. This causes people to minimiz ...
*
Great Depression
The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty, drastic reductions in industrial production and international trade, and widespread bank and ...
*
Names of large numbers
Depending on context (e.g. language, culture, region), some large numbers have names that allow for describing large quantities in a textual form; not mathematical. For very large values, the text is generally shorter than a decimal numeric repre ...
*
Long and short scales
The long and short scales are two power of 10, powers of ten number naming systems that are consistent with each other for smaller order of magnitude, numbers, but are contradictory for larger numbers.
Other numbering systems, particularly ...
References
*
*
Notes
Further reading
*
*
*
*
External links
*
bankjegy.szabadsagharcos.org(Hungarian banknote catalog)
*
www.numismatics.hu(Roman and Hungarian related numismatic site)
*
papirpenz.hu(pictures of korona, pengő and forint banknotes)
*
(homepage of the Hungarian Coin Collectors' Society)
*
article on the history of the pengő
{{DEFAULTSORT:Hungarian pengo
Modern obsolete currencies
Pengo
1927 establishments in Hungary
1946 disestablishments in Hungary
Currencies of Hungary