Finance:Monetary reform in Russia, 1998

The monetary reform of 1998 in Russia was launched on January 1, 1998. Preparation started in August 1997. Replacement of the old banknotes occurred gradually, until 2002.

Background

Rumours of reform occurred regularly and were repeatedly denied. In June 1996, the head of the Working Center for Economic Reform Minister Sergei Pavlenko announced the imminent denomination. According to his calculations, it could not be implemented before 1998, "when inflation in the country will be permanently suppressed". However, in September 1996, the chairman of the Central Bank of Russia, Sergei Dubinin, said that monetary reform was premature.

Reform

thumb|250px|50,000 roubles, pre-reform banknote (issued in 1995) thumb|250px|50 roubles Redenominated banknote (issued in 1997) On August 4, 1997, President Boris Yeltsin issued a presidential decree, "On change the face value of a currency and the scale of prices". Exchange began on January 1, 1998, with a new ruble being worth 1000 old (1993 and 1995) rubles.

Since the monetary reform in the Soviet Union, 1991, had left a negative memory by the three-day exchange of 50 and 100-ruble notes, the new exchange was held progressively, until 2002.

All redenominated coins of the Central Bank of Russia (1, 5, 10, 20, 50, 100 rubles and collectible), contrary to the tradition of the previous two denominations, ceased to be legal tender. The appearance of the new banknotes after the denomination did not change, but only the face value of the zeros was removed.

Coins disappeared from circulation as well as the old 1000-ruble banknote, equivalent to the new 1-ruble coin.

Also were introduced kopek coins, with the image of St. George (1, 5, 10, 50 kopeks), and ruble coins, with the image of an eagle (1, 2, 5 rubles).

Results

The monetary reform had a positive impact on the money circulation: it reduced the nominal amount of money catering to payment transactions, it simplified the calculation of the population for goods and services, and accounting operations could be performed with and without cash. There was a return to the familiar monetary system.