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History of Österreichisch-Ungarische Bank
The affairs between Austria and Hungary had been straightened in 1867. The new constitution of the state required the development of an adequate monetary authority. The Priviligirte Nationalbank (Privileged national bank) was therefore transformed into the Österreichisch-Ungarische Bank. The law from 27 June 1878 prescribed that the bank would be headquartered in Vienna and Budapest. The profit of the bank was to be shared.
During the 1880s the bank was very prosperous. Supported by the transition to the gold currency (1 Gulden = 2 Kronen) the bank managed to replace all outstanding state bills with its own banknotes. The positive development continued and was only disrupted by the start of World War 1. To support the requirements of the war the number of the outstanding banknotes was increased continuously. At the end of the war the circulation volume of banknotes had increased tenfold. The end of the Great War also brought the end of the Austrian-Hungarian Empire and with it the dissolution of the Österreichisch-Ungarische Bank. The requirement of its closure was part of the peace settlement of St. Germaine.
Initially the bank had to concentrate its activities on the core countries Austria and Hungary, as many regions of the previous empire became part of other countries after the war. But the desire in Hungary to control its money separately increased. In 1920 the Österreichisch-Ungarische Bank stopped its activities in Hungary. In Austria the increase of the number of issued banknotes continued and created inflation. With the foundation of the Österreichische Nationalbank on 2 June 1923 the business of the Österreichisch-Ungarische Bank was wound down. A law about its dissolution came into effect on 6 July 1923.
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