Hungary’s hyperinflation: When a wheelbarrow of money was worth nothing

In the summer of 1946, Hungary experienced one of the worst bouts of hyperinflation in world history. The pengő, once a stable currency during the Horthy era, could no longer serve its intended purpose. War devastation, plummeting production, and erratic monetary policy triggered a total economic collapse.

What led to the collapse?

The destruction caused by the Second World War shattered the country’s economy. Incomes dried up, government revenue collapsed, and spending soared. By autumn 1945, state expenditure was eleven times higher than revenue. Successive governments only exacerbated the crisis by attempting to print their way out of it. Banknote presses worked overtime, churning out more currency, which only fuelled the inflationary spiral.

Pengő and astronomical figures

By the summer of 1946, Hungary’s economy had deteriorated so severely that conventional monetary practices became meaningless. The government introduced the b-pengő, a version of the pengő pegged to the adópengő (tax pengő), but even this could not halt the inflation. Denominations skyrocketed from tens of thousands to millions, billions, and even trillions in dizzying succession, as the currency lost value almost by the hour. To meet printing demands, several Budapest-based printing houses assisted the overstretched national mint. These higher-denomination notes were produced rapidly using simplified offset printing—and in such vast quantities that they were no longer even numbered.

One of the most extreme moments of Hungarian hyperinflation came on 12 July 1946, when the country issued the highest denomination banknote ever printed: 100 million b.-pengő. Despite its staggering nominal value, it was practically worthless upon release and remained legal tender for only three weeks.