10000 Forint (Unitarian Church) – Hungary

In 2018, Hungary's currency situation was characterized by a period of deliberate weakening and historic lows for the Hungarian forint (HUF), driven primarily by the monetary policy of the National Bank of Hungary (MNB). Under the leadership of Governor György Matolcsy, the MNB maintained an ultra-loose policy with record-low base rates and a unique system of "quantitative easing" using unconventional tools like interest rate swaps and funding for growth. The explicit goal was to keep borrowing costs cheap for the government and businesses, stimulate lending, and maintain export competitiveness through a weaker currency. This policy succeeded in keeping the forint soft, with the EUR/HUF rate consistently trading above 310 and reaching historic lows near 330 in the second half of the year.

This weak-forint strategy, however, created significant tensions and trade-offs. While it supported economic growth (which exceeded 4% in 2018) and helped the government finance its debt cheaply, it imported inflation and increased the burden of foreign-currency-denominated household loans (mostly in Swiss francs, a legacy from before 2010). Rising global oil prices and domestic wage growth further fueled inflation, which hovered around the MNB's 3% target but showed upward pressure. Consequently, the central bank faced growing criticism for prioritizing growth over price stability and for the increased vulnerability of Hungarian households and the economy to sudden shifts in currency markets.

By the end of 2018, pressures were mounting for a policy shift. As the US Federal Reserve raised rates and global monetary conditions tightened, the forint came under sporadic selling pressure, highlighting its vulnerability. The widening interest rate differential between Hungary and its main trading partners in the Eurozone began to strain the MNB's strategy. This set the stage for a pivotal change in 2019, when the central bank began to slowly unwind its unconventional tools and signal a move toward monetary tightening, marking the beginning of the end for the prolonged period of deliberate forint weakness.