What war does to money
We looked at six wars and crises in Europe. In most of them ordinary money lost value fast, and each time governments stepped in with new currencies, frozen accounts or capital controls.
Germany · 1914–1923
- What happened
- The war was paid for with loans and printed money. In November 1923 one dollar cost 4.2 trillion marks; in 1914 it had been 4.2 marks.
- What governments did
- A new currency, the Rentenmark: 1 Rentenmark replaced 1 trillion (10¹²) paper marks. Savings were wiped out.
Netherlands · 1945
- What happened
- During the occupation the money supply grew from ƒ2.6 billion (1940) to ƒ10.9 billion (1945), while far less was available to buy.
- What governments did
- Minister Lieftinck's monetary purge: 100-guilder notes became invalid on 9 July, all other notes on 26 September. Bank accounts were frozen and everyone first received ƒ10 in new money.
Hungary · 1945–1946
- What happened
- The worst hyperinflation ever recorded: in July 1946 prices doubled roughly every 15 hours.
- What governments did
- On 1 August 1946 the forint arrived: 1 forint replaced 4 × 10²⁹ pengő.
West Germany · 1948
- What happened
- After the war the Reichsmark was almost worthless. Cigarettes worked better as a means of payment than money.
- What governments did
- On 20 June 1948 the Deutsche Mark was introduced. Wages and prices converted 1 to 1, but savings were converted at roughly 10 Reichsmarks to 1 Deutsche Mark or worse.
Ukraine · 2014–2022
- What happened
- After the annexation of Crimea and the war in Donbas, the hryvnia fell from about 8 to more than 30 per dollar (February 2015).
- What governments did
- When the full-scale invasion began in 2022, the central bank fixed the rate at 29.25 per dollar, and in July 2022 adjusted it to 36.57: the dollar became 25% more expensive. Withdrawing and transferring foreign currency was restricted.
Russia · 2022
- What happened
- After the invasion of Ukraine and Western sanctions, the rouble fell to historic lows.
- What governments did
- The central bank raised its key rate to 20%, exporters had to convert 80% of their foreign earnings, and capital controls were introduced. The rate recovered, but Russians could no longer freely withdraw their dollar savings or move money abroad.
What you can learn from this
- Ordinary money in the bank and large banknotes were always the most vulnerable.
- Governments intervene with new currencies, frozen accounts and capital controls, often overnight.
- Spreading helps: supplies, cash in small denominations and tangible assets. Bitcoin can be a supplement, without any guarantee.