Russia is braced to accept athletes, commentators and fans from around the world for the 22nd Winter Olympics, drawing international attention to the massive country.
This brought our attention to the ruble, Russia’s 500-year-old currency. The ruble has passed through four distinct stages over Russia’s long and turbulent history.
Overview
The ruble (also spelled rouble) is the currency of the Russian Federation as well as the republics of Abkhazia and South Ossetia. It was formerly the currency of both the Russian Empire and the Soviet Union before those governments were dissolved.
The word ruble is said to be derived from the Russian verb руби́ть (rubit’), meaning to chop. Each ruble has been worth 100 kopecks since the smaller coins were introduced in 1710. Ten rubles are sometimes called chervonets because the gold coins issued in 1923 under Soviet rule held the same value.
Rubles in Antiquity
The first iteration of the ruble was in place for more than 200 years. In 1704, Tsar Peter I (also known as Peter the Great) reformed the currency to standardize the ruble to 28 grams of silver. Higher denominations were also minted in gold and platinum.
Over time, the precious metals content of the ruble evolved to about 18 grams of pure silver or 1.2 grams of gold. A platinum ruble was introduced in 1828, with one ruble equalling 3.45 grams of platinum. (Don’t forget, Russia has some of the most abundant gold and platinum resources in the world.)
In December 1885, a new standard for the ruble was adopted to reduce the gold content down to 1.161 grams, pegging the gold ruble against the French franc at a rate of 1 ruble to 4 frances. This rate was then again revised in 1897 so that 1 ruble was equivalent to 2 ⅔ francs (or 0.774 grams of gold).
But then World War I began, and the Russians dropped the gold standard. In 1921, the value of a ruble fell dramatically and the country suffered hyperinflation.
The Ever-Inflating Ruble
When the Soviet Union was founded in 1922, the Russian ruble became the Soviet ruble. In an effort to curb hyperinflation, the new Soviet ruble was worth 10,000 Russian rubles. (This is also when the chervonets were introduced.) Because of poor security features, rubles were easy to fake, adding to the hyperinflation problem.
These rubles were in several denominations, in both coins and banknotes.
The next year, the ruble was reinvented again—this ruble was valued at 100 of the former rubles.
The first coins were minted from 1921-1923. They were minted in silver with denominations of 10, 15, 20 and 50 kopecks and 1 ruble. Gold chervonets were issued in 1923. All the coins included the slogan “Workers of the world, unite!”
The next iteration of the ruble—known as the “gold ruble”—was introduced in 1924 and stuck until 1947. This ruble was valued at 50,000 of the previous rubles!
The value of the “gold ruble” was linked to that of the chervonets, at the value of 10 rubles per 1 chervonet. Coins were issued in 1924. Paper money was issued in rubles only for values below 10 rubles; higher denominations were issued in paper chervonets.
1924 also saw the introduction of copper coins, with 1, 2, 3, and 5 kopecks added to circulation. New silver 10, 15, and 20 kopecks were introduced, as well as the 50-kopeck poltinnik. Coins were now minted in the name of the USSR, but older coins were allowed to remain in circulation.
Over a few years, the large coins were discontinued, with smaller aluminum-bronze coins minted to replace the copper and cupro-nickel coins replacing the silver. By 1935, the coins had undergone another revision, with the “Workers of the World, Unite!” slogan dropped and an Art Deco-inspired design added for the kopecks.
Confiscation and Reinvention
At the end of World War II, the Soviet government decreed a confiscatory redenomination of the currency to reduce the amount of money circulating. This was done to prevent farming peasants who had accumulated cash through wartime food prices from buying products in the ensuing recovery. The old rubles were now valued at 1/10 of their face value; salaries remained the same, and 3,000 rubles or less in bank accounts weren’t revalued.
Because the Soviet Union had a planned economy, the role of the ruble was much like that of food stamps. Currency was not internationally exchangeable and export was illegal.
In 1961, the confiscation and redenomination happened again. Officially, the ruble was now equal to 0.987 grams of gold — but the exchange for gold was never available to the public. New banknotes were issued with art focusing on industrial achievements.
The coins minted in 1958 are considered the most valuable of Russian coins because they are the most rare. They were struck in aluminum in denominations of 1, 2, 3, 5, 10, 15, 20 and 50 kopecks and 1, 3 and 5 rubles. They had all the same design and were mass-produced but the majority were melted down when the plan was scrapped.
A commemorative series of 10, 15, 20, 50 kopecks and 1 ruble was issued in 1967 to celebrate the 50th anniversary of the Russian Revolution. These depicted Premier Vladimir Ilyich Lenin and socialist achievements.
The famous palladium Russian ballet coins were released by the Soviet Union from 1991 to 1997 to raise extra funds for the Russian bank. These coins are growing more popular as collectible investments both for their rarity and the increasing value of palladium as a precious metal.
This ruble held parity with the British Pound Sterling until 1991 when the Soviet Union collapsed.
Collapse and Reincarnation
With the fall of the Soviet Union (and its government-controlled planned economy) came a turbulent collapse of the ruble.
The ruble remained the currency of the Russian Federation, and a new set of banknotes was introduced by the Bank of Russia in 1993. But the hyperinflation of the 1990s as Russians struggled to adjust to an open market economy threw the ruble into disarray.
It wasn’t until 1998 that the ruble was again redenominated. The newest iteration of the ruble now equaled 1000 of the old rubles, but this rebranding was mostly psychological and did nothing to correct the economic problems facing Russia. In the first six months of use, the 1998 ruble lost 70 percent of its value against the U.S. dollar.
(This also meant that one pre-1921 ruble would be worth 2 x10-16 current rubles. That’s what repeated hyperinflation does to a currency!)
Now ruble coins are made of cupronickel-steel, brass, nickel plated steel, and brass plated steel. The 1 and 5 kopeck coins are rarely used because they are such a low value, and the 10 kopeck isn’t favored by consumers. The kopeck depicts St. George and the Dragon while the ruble includes the double-headed eagle symbol found on the Russian coat of arms.
Ahead of the 2014 Olympics, the Bank of Russia created a commemorative cupronickel 25 ruble coin that was released beginning in 2011. One side includes the Olympic rings with “Sochi.ru” and 2014. The reverse includes the Russian coat of arms and “25 rubles.”
Commemorative Olympic banknotes have also been issued, featuring winter sports in bright colors.
Today, the ruble is slowly re-establishing itself as a currency. As of January 29, the ruble-Euro exchange rate had reached 48:1 on the Moscow Exchange for the first time.
The history of the ruble offers significant insight into the state of the Russian economy, and lessons for other nations.
What should the United States learn from the history of Russia’s ruble?
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