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Soviet ruble

The ruble or rouble (рубль; see below for other Soviet languages) was the currency of the Soviet Union. One ruble is divided into 100 kopeks, kopecks, or copecks (Russian: копе́йка, plural копе́йки). It also was a reserve currency along with the United States dollar from the 1950s until the Soviet collapse in 1991.

Etymology

The word "ruble" is derived from the Slavic verb рубить, rubit, i.e., to chop. Historically, "ruble" was a piece of a certain weight chopped off a silver ingot (grivna), hence the name.

Ruble in the Soviet Union

The Soviet currency had its own name in all Soviet languages, sometimes quite different from its Russian designation. All banknotes had the currency name and their nominal printed in the languages of every Soviet Republic. This naming is preserved in modern Russia; for example: Tatar for ruble and kopek are sum and tien. The current names of several currencies of Central Asia are simply the local names of the ruble.

The name of the currency in the official languages of the 15 republics, in the order they appeared in the banknotes:

Language	In local language		Transliteration
Language	ruble	kopek	ruble	kopek
Russian	рубль	копейка	rubl’	kopeika
Ukrainian	карбованець	копійка	karbovanets’	kopiyka
Belarusian	рубель	капейка	rubyel’	kapeika
Uzbek	сўм	тийин	so'm'	tiyin
Kazakh	сом	тиын	som	tiyn
Georgian	მანეთი		manati
Azerbaijani	манат	гəпик	manat	qəpik
Lithuanian	rublis	kapeika	—	—
Moldavian	рублэ	копейкэ	rublă	copeică
Latvian	rublis	kapeika	—	—
Kyrgyz	сом	тыйн	som	tyin
Tajik	сўм		sum
Armenian	ռուբլի	կոպեկ	roubli	kopek
Turkmen	манат		manat
Estonian	rubla	kopikas	—	—

Note that the script for Uzbek, Azerbaijani, Moldavian, and Turkmen have switched from Cyrillic to Latin some time around the breakup of the Soviet Union.

Historical Soviet rubles

First Soviet ruble

The first ruble issued for the Socialist government was a preliminary issue still based on the previous issue of the ruble prior to the Russian Revolution of 1917. They are all in banknote form and started their issue in 1919. At this time other issues were made by the white Russian government and other governing bodies. Denominations are as follows: 1, 2, 3, 5, 10, 15, 25, 50, 60, 100, 250, 500, 1,000, 5,000, 10,000, 25,000, 50,000, 100,000. Short term treasury certificate were also issued to supplement banknote issue in 1 million, 5 million, 10 million rubles. These issue was printed in various fashions, as inflation crept up the security features were few and some were printed on one side, as was the case for the German inflationary notes.

Second Soviet ruble, January 1, 1922 - December 31, 1922

In 1922, the first of several redenominations took place, at a rate of 1 "new" ruble for 10,000 "old" rubles. The chervonets (червонец) was also introduced in 1922.

Third Soviet ruble, January 1, 1923 - March 6 ,1924

A second redenomination took place in 1923, at a rate of 100 to 1. Again, only paper money was issued. During the lifetime of this currency, the first money of the Soviet Union was issued.

Fourth (Gold) Soviet ruble, March 7, 1924 - 1947

A third redenomination in 1924 introduced the "gold" ruble at a value of 50,000 rubles of the previous issue. This reform also saw the ruble linked to the chervonets, at a value of 10 rubles. Coins began to be issued again in 1924, whilst paper money was issued in rubles for values below 10 rubles and in chervonets for higher denominations.

Fifth Soviet ruble, 1947 - 1961

Following World War II, the Soviet government implemented a confiscatory redenomination of the currency to reduce the amount of money in circulation. This only affected the paper money. Old rubles were revalued at one tenth of their face value.

Sixth Soviet ruble, 1961 - 1991

The 1961 redenomination was a repeat of the 1947 reform, with the same terms applying. The Soviet ruble of 1961 was formally equal to 0.987412 gram of gold, but the exchange for gold was never available to the general public. This ruble maintained parity with the Pound Sterling until the breakup of the Soviet Union in 1991 when the ruble became the new currency of the Russian Federation.

Economic role

The economy of the Soviet Union was a government-controlled planned economy, where the government controlled prices and the exchange of currency. Thus, its role was unlike that of a currency in a market economy, because distribution of goods was controlled by other mechanisms than currency. Only a limited set of products could be freely bought, thus the ruble had a role similar to trading stamps or food stamps. The currency was not internationally exchangeable and its export was illegal. Some have even ironically opined that the Soviet ruble was not a currency at all, because one could not buy anything with it, except vodka. The sudden transformation from a Soviet "non-currency" into a market currency contributed to the economic hardship following the collapse of the Soviet planned economy.

The gold-pegged ruble could be considered a currency, but it was not exportable either.

The Collapse of the Soviet ruble

Slightly more than two years after the fall of the Berlin Wall, the Soviet Union came to an end. In the very beginning of the post-Soviet economic transition quite a lot of people and institutions (including the International Monetary Fund) believed in the possibility to maintain the common currency working for all or at least for some of the former Soviet Union’s countries. Political considerations were one reason for this advocacy. Certain politicians were hoping to rebuild the former empire in some way, or at the very least, maintain “special relations” among former Soviet republics. The idea of the “near abroad” reflects this view in the best way. However economical reasons for maintaining the ruble zone were also put forward. The wish not to disrupt the strong trade relations between former Soviet republics was the most important goal.

The first the break-up of the Soviet Union was not accompanied by any formal changes in monetary arrangements. The Central Bank of Russia was authorized to take over the State Bank of the USSR (Gosbank) on 1 January 1992. It continued to ship USSR ruble notes and coins to the central banks of the other fourteen countries which had formerly been the main branches of Gosbank in the republics. The political reality however was not favorable for maintaining a common currency, and looking back the attempts at keeping the ruble zone intact were very naïve. A strong political consensus in respect to monetary and fiscal targets, the common institution in charge of implementing these targets, and some minimum of common legislation (concerning the banking and foreign exchange regulations) are absolutely necessary conditions to have a common currency. Amidst the economical chaos, mistrust and adjustment to democracy and market economy these conditions were far from reality. The ruble zone was bound to collapse at some point.

During the first half of 1992 a monetary union with 15 independent states all using the ruble existed. Since it was clear that the situation would not last each of them was using its position as “free-riders” to issue huge amounts of money in the form of credit (since Russia held the monopoly on printing banknotes and coins). Ukraine was very active in this. As a result some countries were issuing coupons in order to “protect” their markets from buyers from other states. The Russian central bank responded in July 1992 by setting up restrictions to the flow of credit between Russia and other states. The final collapse of the ruble zone began with the exchange of banknotes by the Central bank of Russia on Russian territory at the end of July 1993. As a result other countries still in the ruble zone (Kazakhstan, Uzbekistan, Turkmenistan, Moldova, Armenia and Georgia) were simply ‘pushed out’. By November 1993 all newly independent states had introduced their own currencies. Except for war-torn Tajikistan (May 1995) and unrecognized Transnistria (1994).

Details on the introduction of new currencies in the newly independent states are discussed below.

Country	New currency	Conversion rate from ruble	Date introduction new currency	Date leaving ruble zone	Remarks
	Dram	200	22 November 1993	?	-
	Manat	10	15 August 1992	?	The Manat was revalued 5,000 to 1 on 1 January 2006.
	Ruble	10	May, 1992	?	The Belarusian ruble was revalued 1,000 to 1 on 1 January 2000.
	Kroon	10	20 June 1992	22 June 1992	Pegged to German Mark (1 DEM = 8EEK). The first ‘hardened’ currency in former SU. Estonia plans to introduce the euro in 2011.
	Kupon lari	1	5 April 1993	?	The "first Lari" was a temporary currency. It was replaced 2 October 1995 at a rate of 1,000,000 to 1 by the Lari.
	Tenge	500	15 November 1993	?	-
	Som	200	10 May 1993	15 May 1993	Until 1 January 2008 only banknotes were issued.
	Rublis	1	7 May 1992	20 July 1992	The Latvian ruble was a temporary currency, replaced by Lats at a rate of 200 to 1 in March 1993. Latvia plans to introduce the euro in 2012.
	Talonas	1	1 May 1992	1 October 1992	The Talonas was a temporary currency, replaced by the Litas at a rate of 100 (Talonas) to 1 on 25 June 1993. The Litas is to be replaced by the Euro in 2010.
, (excl. Transnistria).	Cupon	1	1992	?	The Cupon was a temporary currency replaced by the Leu at a rate of 1,000 to 1 on 29 November 1993.
	Ruble	1	1992	July 1993	The Russian ruble was revalued 1,000 to 1 on 1 January 1998
	Ruble	1	1994	?	The Transistrian Ruble was revauled 1,000,000 to 1 in 2000.
	Ruble	100	10 May 1995	?	As a result of its civil war, Tajikistan was the last country to leave the ruble zone. The Tajikistani ruble was replaced by the Somoni at a rate of 1,000 to 1 on 30 October 2000.
	Manat	500	1 November 1993	?	To be revalued in 2009
	Karbovanets	1	10 January 1992	?	The Karbovanets was replaced by the Hryvnia at a rate of 100,000 to 1 on 2 September 1996.
	Som	1	15 November 1993	15 November 1993	The first Som was a transitional currency, revalued 1,000 (old) to 1 (new) on 1 July 1994.

Kyrgyzstan

Kyrgyzstan decided to leave the ruble zone, because it considered the Russian monetary policy to be too inflationary; which was not good for stabilizing the economy. Kyrgyzstan introduced its own currency (the Som) on 10 May 1993. The first issue consisted of banknotes of 0.01; 0.10; 0.50; 1; 5 and 20 Som. After a period of dual circulation the Som became the only legal tender, on 15 May. New series of banknotes were introduced in 1994 and 1997. Starting in January 2008 low denomination banknotes are being phased out and replaced by coins.

Latvia

Latvia was the first country to introduce its own currency: the Latvian ruble. It was the second country to leave the ruble zone entirely. Latvia decided to leave the ruble zone, because it considered the Russian monetary policy to be too inflationary; which was not good for stabilizing the economy. Latvia declared independence on 4 May 1990, this was however not formally recognized by the Soviet-Union until 25 December 1991. On 3 September 1991 the Supreme Council of the Republic of Latvia passed a resolution to raise (or actually restore) the status of the Bank of Latvia, to that of a central bank with the exclusive right to issue the national currency.

In the first four months of 1992 Latvia was adversely affected by the inflation of the ruble. In addition, the outgoing cash payments (with other ex-USSR states) surpassed the incoming money amounts by 122 million rubles (5.9%) in February and in April by 686 million rubles (29.2%), thus causing a very serious shortage of cash. Since money was issued by Russia, the Bank of Latvia was unable to improve the cash circulation in the country. The situation completely depended on the possibility of receiving or buying cash and credit resources from the Russian central bank. It was evident that a crisis could develop, in which the Bank of Latvia would not be able to execute even the most necessary payments. Thus the Monetary Reform Committee of the Republic of Latvia was established, and on 4 May 1992 it passed the resolution on introducing a new temporary currency: the Latvian ruble. Notes were issued on 7 May in the following denominations: 1, 2, 5, 10, 20, 50, 200 and 500 rubles. They were exchanged at par with Soviet rubles. Until 20 July both currencies circulated together, at that day the Soviet ruble ceased to be legal tender and Latvia left the ruble zone entirely. The Latvian ruble was however intended as a temporary currency. It was gradually replaced by the new national currency (the Lats). This process started on 5 March 1993 with the introduction of the 5 lats-banknote and would be completed on 20 July 1998, with the 500 lats-banknote. The successful reform ending in the introduction of the lats facilitated Latvia’s transition to a stabile market economy.

Uzbekistan

Uzbekistan was ‘pushed out’ of the Ruble zone as a consequence of the July 1993 introduction of new banknotes in Russia. Uzbekistan introduced a temporary national currency (the Som) on 15 November 1993. It replaced the ruble at a rate of 1:1. Between July and November 1993 old and new ruble notes circulated together. On 1 July 1994 the temporary Som was replaced by a new, permanent, version of the Som. Old notes were exchanged at a rate of 1.000 to 1. At it’s introduction 7 Som were equal to 1 American Dollar.