Historical Sketch

In the aftermath of the Russian civil war, Russia, Ukraine, Belarus, and Transcaucasia, which had seceded from the Russian Empire during the Civil War and where the Communists had prevailed, joined to form the Union of Soviet Socialist Republics (USSR). Until 1936, territorial reorganizations had elevated the number of constituent republics from four to eleven. During World War II, five more republics were created by annexation of neighboring territories, one of which was dissolved in 1956, so that since then and until its demise, the USSR comprised 15 constituents. During 1991, all of them seceded and declared independence, starting in the Baltics and the Caucasus, ending with the Russian Federation, which left in December and thereby caused the disappearance of the Soviet Union.

Monetary History Overview

Beginning of 1924, the State Bank of the USSR began operations, successor to the Russian State Bank. In March 1924, a currency reform was carried out. Inflation caused by the Russian civil war had destroyed 10 digits within less than seven years. Four zeros were cut, and the 1st Soviet (Gold) Ruble was created as gold currency at the tsarist parity of 1897, based on the "Chervonetz" created as stable paper currency in 1923. Subsequently, the Soviet paper money issued by the State Treasury was denominated in Ruble, while the State Bank issued notes in Chervonetz of 10 Rubles. Both circulated concurrently. In 1937, the Ruble went off the gold standard and got pegged to the US Dollar, which corresponded to an almost 80% devaluation. The term "gold" was omitted from the treasury notes, the State Bank notes continued to be denominated in Chervonetz of 10 Rubles. During World War II, the western part of the Soviet Union came under German occupation. The Soviet currency was withdrawn and exchanged into occupation money. When the Red Army began pushing back the occupants, the money exchange was reverted. During wartime, the money supply had expanded, such that a currency reform was carried out in December 1947. The 2nd Soviet Ruble was nominally introduced on par, but this applied only to salaries and deposits up to a threshold. Everything in excess was discounted, cash holdings were exchanged at 10% only, and this had to be done within a week. The Dollar peg of the Ruble that had been introduced in 1937 got replaced by a nominal gold peg in February 1950, which corresponded to a 30% appreciation against the US currency. The official rate remained frozen until the end of the communist rule. Since the late 1950s, effective rates for transactions with capitalistic countries began to emerge. Beginning of 1961, a currency reform was carried out to eliminate the over-valuation. One zero was cut, and the 3rd Soviet Ruble, referred to as "heavy" Ruble, became the new unit. The parity against gold was lowered by 56%, such that the effective rates disappeared for a decade. In the early 1970s, the Soviet exchange policy was revised. The official rate was restricted to selected state activities. Commercial transactions with capitalistic countries were handled at various effective Dollar rates, the same existed for trade with socialist economies, done at the so-called "Transfer Ruble" rates. In the early 1990s, the Soviet Union prepared for a gradual liberalization of the currency. In April 1991, currency auctions were started that created a market rate for the Ruble.

During 1991, all the Soviet Republics seceded from the USSR until Russia did the same in December 1991. By the end of the year, the USSR was dissolved. Its currency remained in circulation in the successor states, Tajikistan being the last one to demonetize.

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