ABSTRACT
The structure of the banking system which evolved in the course of 1948 was an exact copy of the Soviet banking system created during the 1930 monetary reform. The National Bank of Hungary (NBH) became the supreme institution of the new banking system. To enable the central bodies effectively to manage expropriated state property, it was necessary to centralize the monetary system and to establish a fully nationalized banking system, according to the logic of the directive planning. In line with the Soviet model, consumer and corporate banking were strictly separated in the new banking system: the NBH became the bank of households. In 1953–54 an economic policy preferring consumption took precedence, leading to a rapid increase in cash held by households. Economic control influenced the activities of enterprises through the system of enterprise taxation and subsidization, and through regulations pertaining to the use of incomes retained by enterprises.
