Historical Sketch

The establishment of the first Russian state dates to the 9th century. After the destruction of the Kievan Rus by the Mongols began the rise of the Grand Duchy of Moscow, whose ruler assumed the title of Tsar of all Russians in 1547. In the 17th century, the Romanov family ascended the throne and kept it until the end of the monarchy. During World War I, the tsar was overthrown in February Revolution of 1917 and replaced by a provisional government. In a second revolution in October of the same year, the Bolshevik faction of the Socialists took power and constituted the Russian Federal Soviet Republic. The double revolution triggered a civil war that lasted until the early 1920s when the Soviet troops finally prevailed. In 1922, Russia and the three states of Ukraine, Belarus, and Transcaucasia, which had emerged from Imperial Russia during the civil war and where the Communists also were victorious, re-united to form the Soviet Union. In the late 1980s, the economic downturn had eroded the Communist power and in 1991 the different constituents of the USSR declared independence and seceded. In December 1991 finally, the Russian Federation also left the Soviet Union as the last member.

Monetary History Overview

In the year 1718, tsar Peter I modernized the Russian coinage system. The coin weights of the 1st Russian Ruble were standardized, and the currency was in the bimetallic standard. In the early 1760s, the weight of the gold and silver coins was reduced, and the gold-to-silver ratio was aligned with the European standards. The coinage standard remained then unchanged for more than a century. In 1797, there was a short-lived attempt at returning to the silver standard based on a "heavy" Ruble close to the Brabant Thaler (Kronentaler) that was popular as a trade coin. As it failed to gain acceptance from the population, the experiment was abandoned after 10 months. In the late 1820s, Russia began to experiment with platinum as a third coinage metal. However, the coins were not popular, and the minting technique was hardly able to handle the new metal. Platinum coinage was given up after 1845. The issuance of state paper money had begun in the 1760s. The so-called "Assignats" (after the issuing State Assignation Bank) proliferated. In particular, the financing of the Napoleonic war brought a quick depreciation against specie. In the 1840s, the Assignats were devalued and exchanged into state credit notes. The 1843 reform switched to Ruble to the silver standard, gold coins were remained in circulation, initially with a fixed agio against silver, later the ratio between two metals fluctuated. But anyway, payment transactions were dominated by state paper money which was legally. In the 1880s, the gold-to-silver ratio on the marked had reached a value of 15.5 as it was common in Europe. In a 1885 reform, the Ruble was aligned with the bimetallic standard of the Latin Monetary Union. However, specie circulation, gold circulation in particular, could not be restored. A second reform of 1897 brought the Ruble to a gold standard with coins that were lighter by one third The inconvertible paper money was withdrawn, and new paper money was issued by the State Bank. The gold standard remained in place until the outbreak of the First World War, like almost everywhere in Europe.

The military development brought an economic downturn that led to the overthrow of the monarchy in the two revolutions of 1917. The subsequent civil war pushed Russia into monetary anarchy. Many local entities started issued paper money, all denominated in "Ruble", however at unclear parity and frequently without backing. In November 1921, the victorious communists decreed a currency reform for the next year. New state treasury notes "model 1922" were issued, and the circulating notes issued by the empire, the provisional government of 1917, and the bolshevist government since the revolution were globally revalued by cutting four zeros. The 2nd Russian Ruble remained highly inflationary so that another reform was started in the second half of 1922. In preparation, the pre-1922 notes were withdrawn and exchanged. In January 1923, two zeros were cut, and the 3rd Russian Ruble was introduced. At the same time, a stable gold currency "Chervonetz" was issued by the State Bank. The notes were backed by gold, and the unit corresponded to 10 Rubles in the 1897 standard. The Chervonetz was restricted to government transactions and accounting, the Ruble went into an even worse hyperinflation and lost another four zero until the 1924 currency reform carried out after the handover of responsibility to the Soviet authorities..

In December 1991, Russia declared independence from the Soviet Union. The Central Bank of Russia, which had begun operations already in June, took over from the State Bank of the USSR. The Soviet banknotes and coins remained in circulation and more were issued during 1992 while the Russian currency was gradually introduced. The Soviet money was current in most of the former Soviet republics, so that a constant currency inflow into Russia was destabilizing the anyway fragile currency situation. In July 1993, the withdrawal and demonetization of the Soviet banknotes was decreed. The operation, however, could not be implemented as quickly as intended, and the currency exchange went on until end-1993. The 4th Russian Ruble was initially fixed at about the rate of the former currency auctions for the Soviet Ruble, more than 99% below the old effective rate. In July 1992, the exchange rate got floated. The hardly managed transformation of the former socialist economy led to a rampant inflation at annual rates of up to 50%. Beginning of 1998, a currency reform was carried out. Three zeros were cut, and the 5th Russian Ruble became the new unit. Depreciation continued and amounted to 70% until the end of the year. Then followed more than a decade of currency stability. In 2014, the Ruble lost more than 40% but partly recovered afterwards.

Russia joined the International Monetary Fund (IMF) on 01.06.1992.

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