How Did Money Work In The Soviet Union

History
of the Bank of Russia

The Central Bank of the Russian Federation is the main issuing bank and monetary regulator of the country.

In 1860, the Emperor of Russia Alexander II signed a decree to establish the State Bank. This was the beginning of the history of the Bank of Russia. Initially, the State Bank was mainly engaged in short-term commercial lending. However, historical developments changed everything. In the 1920s, the bank was a key actor in the restoration of the country's financial system and the development of exchange relationships. During the hardships of World War I and the Great Patriotic War, it focused on covering military expenditures and the supply of the army and households with money. In the Soviet Union, the State Bank was a lender for the centrally planned economy, issued money and carried out international settlements. In the challenging 1990s, the bank did its best to keep the economy stable and created the system of foreign exchange regulation and control. Following traditions and extensively introducing innovations, today the Bank of Russia is a technologically advanced mega-regulator responsible for the stability of the entire financial system of the country.

The State Bank was founded in the Russian Empire. According to the charter, it was responsible for promoting 'the revival of trade turnover and the resilience of the monetary system'.

State Bank building in Saint Petersburg (view from Sadovaya Street). Postcard. Before 1904

Alexander von Stieglitz, renowned banker, entrepreneur and philanthropist, became the first Governor of the bank.

Baron Alexander von Stieglitz, the Governor of the State Bank in 1860–1866

The balance sheet of the State Bank totalled 798.5 million rubles. Lending transactions accounted for 45.8 million rubles, while gold reserves were worth 81.7 million rubles. The country's unit of currency was a silver ruble that contained 18 grams of pure silver.

State Bank 4% treasury note for 300 rubles. 1861. Specimen

Branches (offices) of the State Bank were opened throughout Russia. They extended loans to trade and industrial firms, took deposits and opened current accounts.

Rostov-on-Don office of the State Bank. Postcard. 1900s

In 1864, premium bonds were issued on behalf of the State Bank. The revenue was partially used to build railways.

Ryazan office of the State Bank. Postcard. 1902

100 silver ruble internal premium bond issued on behalf of the State Bank. 1864 (reprinted in the 1900s)

Starting from this year and over the next two decades, the State Bank tracked payments made by peasants for the land plots they bought from landlords (as part of the Emancipation Reform of 1861).

Irkutsk office of the State Bank. Postcard. 1904–1909

1-ruble currency note with a facsimile signature of Acting Governor of the State Bank Evgeny Lamansky. 1865

Ufa office of the State Bank. Postcard. Before 1904

Evgeny Lamansky, the State Bank's Governor in 1867–1881

The State Bank started issuing loans to small lenders, whose borrowers were peasants and artisans.

Russian consolidated 4% railroad bond for 125 'metal' rubles (with a facsimile signature of State Bank Governor Evgeny Lamansky). 1880

Yelets office of the State Bank. Postcard. 1904–1909

A loss provision ratio was introduced for joint-stock commercial banks: cash and current accounts with the State Bank should total no less than 10% of a bank's total liabilities.

The State Bank started issuing loans to landlords.

For the first time the interest rate on loans with the State Bank was reduced to 4%, an all-time low.

The State Bank purchased and sold shares and bonds at the price set at the Saint Petersburg Exchange.

The new, second edition of the State Bank charter was adopted. It largely focused on industrial loans aimed at the development of small- and medium-sized industrial production and trade.

Moscow office of the State Bank in Neglinny Passage. Phototype. 1890s

The Saint Petersburg office of the State Bank was opened.

Sergey Witte, the Minister of Finance of the Russian Empire in 1892–1903, the author of currency and State Bank reforms

5-ruble currency note (with a facsimile signature of State Bank Governor Eduard Pleske). 1895. Specimen

The monetary reform launched in 1895 was completed. The gold standard was introduced to money circulation. The ruble was assigned a nominal gold content of 0.77 grams of fine gold.

The State Bank started exchanging credit notes for gold coins and obtained the right to issue banknotes.

Incinerator for destroying old currency notes, the yard of the State Bank building in Saint Petersburg. Postcard, early 20th century.

In Saint Petersburg, the first clearing house of the State Bank was opened; the settlement office carried out settlements between banks and large firms.

An exchange syndicate was established under the auspices of the State Bank to support Russian securities during the economic crisis.

The State Bank launched its first resolution—the banking and industrial group of renowned entrepreneur Lazar Polyakov. Thanks to the support of the State Bank, his banks and companies avoided bankruptcy.

The State Bank received control over small lenders that issued loans to peasants and artisans.

Yekaterinburg office of the State Bank. Postcard. 1915

The Moscow banking consortium was created under the auspices of the State Bank. It united all the major banks of Moscow and the Moscow branches of Saint Petersburg banks. The association aimed at helping Russian trade and industrial firms challenged by the 1905 Revolution.

Deposit receipt, issued by the Saint Petersburg office of the State Bank. 1907

Vault for storing coins and bullions in the State Bank. Photo. 1909

State Bank Board. Photo. 1909

The State Bank started to employ women, a move that was earlier banned. However, only single women were employed and they did not have the status of civil servant.

Foreign currency sale and transfer invoice, issued by the Saint Petersburg office of the State Bank. 1911

Elevator of the State Bank near Gryazi railway station. Postcard. 1910s

Lending to banks accounted for 73% of total lending by the State Bank.

After the outbreak of World War I, the State Bank and its branches stopped exchanging bank notes for gold.

The State Bank extensively floated domestic war loans. For their promotion, it issued agitation posters and postcards created by gifted artists Rihards Zarins (Sarrinsch), Alfred Eberling, Efim Cheptsov and others.

Propaganda postcard for the 1916 military loan, issued by the State Bank

On 25 October (7 November), the Bolsheviks occupied the State Bank premises in Petrograd. Bank officials and officers who did not recognise the new authority went on strike.

In November, the Bolsheviks took control over the State Bank in Petrograd.

After a decree was adopted in December about the nationalisation of banks, a state monopoly on banking was announced.

At the same time, a decree on the inspection of bank vaults was adopted. Gold bullions and coins were confiscated and transferred to the national gold fund.

Decrees were adopted according to which Russian government loans were cancelled and the equity capital of former private banks was confiscated.

On the premises of the State Bank, its branches and offices controlled by the Bolsheviks, the People's Bank of the Russian Soviet Republic was established as a part of the People's Commissariat for Finance. Its main function was the issue of banknotes and their distribution.

After the decree 'On the Cash Unity' was adopted, Soviet institutions and organisations had to keep their money and valuables in the People's Bank or the State Treasury.

A decree was adopted on the merger of treasuries with the institutions of the People's Bank.

The People's Bank of the RSFSR was liquidated and its functions were passed to the finance units of the executive committees of the Soviets of Workers', Peasants' and Red Army Deputies.

The State Bank of the RSFSR was established within the People's Commissariat for Finance. It was established with 'the purpose to use loans and other bank transactions to assist the development of industry, agriculture and trade turnover, and with the purpose of concentrating money turnover and taking other measures aimed at the establishment of the right monetary circulation'.

After the adoption of the decree 'On Foreign Exchange and Precious Metal Transactions', external settlements were entrusted to the State Bank. It had to establish official exchange rates for precious metals and foreign currency.

A monetary reform was launched that lasted until 1924. One ruble of 1922 equalled 10,000 rubles in earlier-issued banknotes, including tsar-era money.

RSFSR State Bank Board meeting. Photo. 1922

The State Bank of the RSFSR was authorised to issue its own banknotes—chervonets, backed by gold by 25%.

10-chervonets note of the RSFSR State Bank of the 1922 design (with facsimile signatures of its Chairman Aron Sheinman and Board members)

The State Bank of the RSFSR was reorganised into the State Bank of the USSR (Gosbank).

New banknotes were introduced. One ruble of 1923 equalled 100 rubles of 1922.

The mintage of the Soviet gold coin—chervonets—was launched. One gold chernovets contained 7.74 grams of fine gold, the same content as in the 10-ruble gold imperial coin.

Office of the USSR State Bank Board in Moscow. Postcard. 1920s

Soviet banknotes of the first issues (the so-called sovznaks) were eliminated as they lost their purchasing power. Treasury notes in the denominations of one, three and five gold rubles were issued. One gold ruble equalled 50,000 rubles in the Soviet banknotes issued in 1923.

The Soviet chervonets started trading on foreign exchanges at gold parity.

A regulation on promissory notes was approved and the instruments became an important source of lending in the State Bank. They were widely used by industrial and trade companies.

As a result of the cash reform, the cash vaults of the State Bank and the People's Commissariat for Finance were united.

The Soviet chervonets stopped quoting on foreign exchanges.

Employees of the Birsk office of the USSR State Bank. Photo. 1926

The State Bank was entrusted with the execution of the state budget.

Opening of a USSR State Bank kiosk at a cinema hall in Vyatka. Photo. 1928

The first charter of the State Bank of the USSR was adopted. The bank was entrusted with the regulation of monetary circulation and short-term lending in accordance with the general plan for the development of the national economy of the USSR.

A credit reform was launched that lasted until 1932. Commercial loans, including promissory notes, were eliminated. The State Bank became the only lender issuing short-term loans and the settlement centre for the national economy.

The State Bank was entrusted with the accounting of production and distribution of products and the enhancement of cost accounting countrywide.

Lending to the agricultural sector was entrusted to Gosbank.

3-chervonets note of the USSR State Bank, of the 1932 design (with facsimile signatures of its Chairman Moisey Kalmanovich and Board members Grigory Arkus and Lev Maryasin)

The State Bank gained control over the payroll expenditures of factories and institutions in the USSR.

Gosbank was entrusted with the organisation of the purchase, acceptance and custody of precious metals and foreign currency.

The State Bank of the USSR started lending to trade companies based on their turnover (payment of purchased goods and services).

By decision of the Government of the USSR, Gosbank was allowed to exchange foreign currency and pay cross-border transfers at the rate of one ruble per three French francs.

The Government confirmed the exclusive right of Gosbank to carry out transactions with gold and other precious metals, foreign currency, foreign securities and papers denominated in foreign currency in the USSR.

The State Bank established the foreign exchange rate at five rubles 30 kopecks per one US dollar.

3-chervonets note of the USSR State Bank, of the 1937 design

The State Bank of the USSR was withdrawn from the People's Commissariat for Finance and started to report directly to the Government.

Training for kolkhoz instructors taking place at the office of the State Bank of the Komi ASSR. Photo. 1938

Bank operations were reorganised: more focus was given to monetary circulation, the network of field offices serving military units was enhanced, the system of cashless settlements was developed, and the level of encashment was raised.

Accountant of the Siberian regional office of the USSR State Bank at work (Novosibirsk). Photo. 1938

The field banks of the People's Commissariat for Finance were reassigned to the State Bank of the USSR. They provided military units with money, carried out their cash servicing (including military trade companies of the field army), and took and issued deposits.

The encashment service was established under the State Bank of the USSR.

In August, the State Bank of the USSR adopted a regulation on field institutions. They reported to the commanders of military units, while Gosbank governed their operations.

After the outbreak of the Great Patriotic War, the State Bank of the USSR increased lending to military industry (without reducing lending to other sectors of the national economy engaged in military orders), provided financial assistance to the army and to factories moved away from the frontline, and ensured settlements in the national economy while keeping austerity measures.

The State Bank of the USSR established a field institution division that provided the army with cash and settlement services. In the early stages of the war, the main objective of field institutions was to provide cash to the troops.

By a decree, the Soviet Government introduced the Distinguished Worker of Gosbank Badge that was awarded to the most outstanding employees. It was the only official award of the State Bank of the USSR.

Instruction to an employee of the Leningrad city office of the USSR State Bank. 1942

USSR State Bank Order, dated 13 March 1942, on the operation of its structural units and regional branches

The State Bank of the USSR provided no less than 1.5 billion rubles for the recovery of the national economy in the territories liberated from the German occupation: the North Caucasus, and a number of regions of Ukraine and Byelorussia.

Employees of the field unit of the USSR State Bank on the eve of the offensive operation to liberate Smolensk. Photo. 1943

The State Bank of the USSR helped restore the national economy. Great efforts were made to organise and restore the network of branches and offices in the liberated regions.

Considerable financial assistance was provided to state farms and collective farms that resumed their work in the liberated territories and near-front regions.

Paying-in book of a Red Army serviceman (for a deposit at a field unit of the USSR State Bank). 1944–1945

Field institutions of Gosbank operated with 25 currencies: German Reichsmarks accounted for 49% of transactions, Polish zloty for 16%, Hungarian pengo for 12% and Romanian lei for 8%.

During the war, monetary circulation increased almost four-fold (money worth 54.5 billion rubles was issued into circulation), whereas trade turnover contracted approximately three-fold.

Gosbank went under the control of the Ministry of Finance of the USSR.

Monetary reform was conducted: old money was exchanged for newly issued currency (at a ratio of 10:1), deposits with savings banks were revalued, and government loans were converted (except for the 1947 loan). The Soviet chervonets was eliminated. Banknotes in the denominations of 10, 25, 50 and 100 rubles were officially named notes of the State Bank of the USSR.

100-ruble note of the USSR State Bank, of the 1947 design

Employees of the Smolensk regional office of the USSR State Bank making a mural newspaper issue. Photo. ca 1948

A new charter of the State Bank was adopted. It stipulated the bank's role as the sole issuing bank, short-term lender and the settlement centre of the USSR.

The ruble was assigned a 0.22 gram content of fine gold. The exchange rate of the ruble against the US dollar was established at 4 rubles.

Gosbank was excluded from the structure of the Ministry of Finance of the USSR.

The resolution of the Government and the Central Committee of the Communist Party 'On the Role and Objectives of the State Bank' was adopted. Its objectives were to raise production, trade turnover and savings, to deliver on the economic plans under the austerity regime, to enhance monetary circulation and to develop the production of fast-moving consumer goods.

USSR State Bank employee operating a coin sorting machine. Photo. 1957

A resolution of the Council of Ministers of the USSR established the Russian Republic Office of Gosbank that carried out bank transactions in the RSFSR.

The credit system of the USSR was reorganised. The Agricultural Bank, the Bank for Municipal and Housing Construction Financing and municipal banks were abolished, and their operations were transferred to the State Bank of the USSR and the All-Union Bank for Financing Capital Investments (Stroybank of the USSR).

Until 1987, the country's banking system consisted of three monopolist banks: Gosbank, Stroybank and Vneshtorgbank.

Growth of investment of the USSR State Bank in the economy in 1932–1958. Study poster (fragment)

A new charter of the State Bank was adopted that assigned it the functions of lending to the national economy, and of the issuing and settlement centre of the country.

Banks in the socialist society. Study poster (fragment). 1960

The USSR conducted a monetary reform. Old money was exchanged for the newly issued money at a ratio of 10:1. The ruble's gold parity was established at approximately 1 gram of fine gold. The exchange rate of the American currency was 90 kopecks per US dollar.

Economist of the Arkhangelsk regional branch of the USSR State Bank in a helicopter on his way to Severodvinsk to exchange money for new 1961-design banknotes and coins. Photo. 1961

50-ruble note of the USSR State Bank, of the 1961 design

State labour savings banks passed under the governance of Gosbank.

The International Bank for Economic Co-operation was established to provide short-term lending to socialist countries and carry out settlements with them.

An economic reform started in the USSR. It was aimed at the economic efficiency of production. The State Bank of the USSR provided its programme aimed at ensuring economic growth.

At the recounting desk of the Kulunda office of the Altai regional branch of the USSR State Bank. Photo. 1960s

Gosbank expanded lending based on the turnover of tangible assets (raw materials and intermediate products) and payroll expenditures. Settlements with the use of cheques and payment orders were widely spread.

The International Investment Bank was established for the purpose of long-term and mid-term lending for the capital investment of socialist countries.

Collectors of the Vladimir regional branch of the USSR State Bank starting their route. Photo. 1971

The Bureau of Scientific and Technological Information and the Central Commission for Improvement Proposals and Innovations were established within the system of the State Bank of the USSR.

Receiving cash at the payment desk in a USSR State Bank office. Photo. 1970s

A new edition of the State Bank charter was adopted. It confirmed its role as the sole issuing bank, the lender of the national economy and the country's settlement centre.

USSR State Bank Board meeting (with Board Chairman Vladimir Alkhimov in the middle). Photo. ca 1980

Ceremonial meeting in the Pillar Hall of the House of the Unions (Moscow), dedicated to the 60th Anniversary of the USSR State Bank. Photo. 1981

Cash desk employee of the USSR State Bank counting small coins. Photo. 1982

The State Bank of the USSR used loans to form 57% of total working capital of the national economy.

Certificate of Commendation of the USSR State Bank Board and the Central Committee of the Public Workers Trade Union. 1985

The system of the State Bank of the USSR consisted of 4,459 institutions (185 branches and 4,274 offices).

A banking reform was launched. The operating special-purpose banks were reorganised and new ones were established. The State Bank of the USSR received the functions of the centralised planned management of the country's monetary system.

The first joint-stock commercial banks opened in the USSR.

The fourth and last charter of the State Bank of the USSR was adopted. Its main objectives included an increase in the efficiency of the use of state credit resources, the coordination of banks' operations in the USSR and the automation of banking operation management systems.

The Russian Republican Encashment Division of Gosbank (ROSINKAS) was founded.

The Chairman of the Supreme Soviet of the RSFSR Boris Yeltsin signed the Regulation 'On the State Bank of the RSFSR and Republican Banks'. The Russian Republican Branch of the State Bank of the USSR was transformed into the State Bank of the RSFSR, accountable to the Supreme Soviet of the RSFSR. The State Bank of the RSFSR was entrusted with the development of a regulation on the organisation of a two-level banking system in the country.

The RSFSR Law 'On the Central Bank of the RSFSR (Bank of Russia)' was adopted. The law recognised the bank as the main bank of the RSFSR accountable to the Supreme Soviet of the RSFSR. Its main objectives included the regulation of monetary circulation, ensuring the stability of the ruble, organising settlements and cash services, supervision over joint-stock commercial banks and other credit institutions, and external economic operations.

On behalf of the State Bank of the USSR, banknotes in the denominations of 1, 3 and 5 rubles were issued (earlier they were called 'state treasury notes of the USSR'), as well as small coins and business strikes in denominations from 10 kopecks to 10 rubles.

For the mintage of coins in the denomination of 10 kopecks, steel billets plated with tombac (copper and zinc alloy) were used. The ten-ruble coin was for the first time made of two parts: a ring made of an alloy of copper, nickel and zinc (German silver) and a brass disk.

The Central Bank of the RSFSR was recognised as the sole body of state monetary and foreign exchange regulation in the republic.

Moscow, 19 August 1991. Armoured vehicles in front of the USSR State Bank building

The State Bank of the USSR was liquidated.

The Bank of Russia received the monopoly right to issue money in the Russian Federation. The Bank of Russia issued its first business strikes and banknotes. The coins featured the image of the double-headed eagle without crowns, sceptre and orb created in 1917 by Ivan Bilibin for the national emblem of the Russian Republic. In 2001, this image became the basis for the official emblem of the Bank of Russia.

The Bank of Russia issued its first commemorative coin in the denomination of one ruble. It was made of cupronickel (an alloy of copper and nickel) and dedicated to the anniversary of Russia's independence.

The market exchange rate of the ruble against foreign currencies was based on the results of trading at the Moscow Interbank Currency Exchange.

The process of transmission of the functions of cash execution of the state budget to the newly established Federal Treasury was launched.

The Bank of Russia issued its first commemorative coins of gold, silver, platinum and palladium.

The Bank of Russia created a system of supervision and inspection of commercial banks and a system of foreign exchange regulation and foreign exchange control. As an agent of the Ministry of Finance, the Bank of Russia organised the government securities market.

The Bank of Russia stopped extending direct loans to finance the federal budget deficit and providing centralised loans to individual sectors of the economy.

On 12 April, the State Duma adopted the Federal Law 'On the Central Bank of the Russian Federation (the Bank of Russia)'. The law assigned the Bank of Russia the functions of issuing bank, refinancing of commercial banks, banking regulation and supervision, foreign exchange regulation and foreign exchange control.

The Russian ruble was revalued at a ratio of 1000:1.

Small coins and business strikes of the Bank of Russia in the denominations of 1, 5, 10 and 50 kopecks and 1, 2 and 5 rubles were issued. The image of Saint George was the main element in the design of the small coins. The business strikes featured the Bank of Russia emblem—the double-headed eagle without crowns, sceptre and orb.

A reform of the banking sector was launched with the aim of enhancing the resilience of the financial sector and developing the national economy.

On 10 July, the Federal Law 'On the Central Bank of the Russian Federation (Bank of Russia)' was adopted; it is the core document regulating the operations of the Bank of Russia. The objectives of the Bank of Russia included the protection and stability of the ruble, the stability and development of the national payment system, and the development and resilience of the financial market of the Russian Federation.

The Bank of Russia made efforts to improve banking supervision and reporting by introducing the system of international standards (IFRS).

The Bank of Russia introduced into circulation a new type of business strike in the denomination of 10 rubles made of steel with brass electroplating.

The Saint Petersburg Mint issued Russia's first five-kilogram gold commemorative coin in the denomination of 50,000 rubles.

The Bank of Russia took up the functions of a mega-regulator—a regulator and supervisor for all participants in the financial sector, including banks, exchanges, insurance companies, and pension and investment funds.

The Bank of Russia issued its first commemorative banknote. The note, in the denomination of 100 rubles, was dedicated to the XXII Winter Olympic Games and XI Paralympic Games in Sochi in 2014.

The Bank of Russia approved the symbol for the ruble selected in a popular vote.

The payment system Mir was introduced—a Russian national payment system independent of foreign payment systems. The first payment cards of the new payment system were issued in December 2015.

The emblem of the Bank of Russia on the business strikes—the double-headed eagle without crowns, sceptre and orb—was replaced with the national emblem of the Russian Federation.

Banknotes in the new denominations of 200 and 2,000 rubles were issued.

The country's first banknote made of polymeric materials was issued—a commemorative banknote in the denomination of 100 rubles dedicated to the 2018 FIFA World Cup.

1860

1861

1862

1864

1865

1867

1872

1880

1882

1883

1884

1885

1890

1892

1894

1895

1897

1898

1899

1902

1904

1905

1906

1907

1910

1911

1912

1913

1914

1916

1917

1918

1920

1921

1922

1923

1924

1925

1926

1928

1929

1930

1931

1932

1933

1934

1936

1937

1938

1939

1940

1941

1942

1943

1944

1945

1946

1947

1948

1949

1950

1954

1955

1957

1958

1959

1960

1961

1963

1965

1967

1970

1971

1972

1975

1980

1981

1982

1985

1986

1987

1988

1990

1991

1992

1993

1995

1998

2001

2002

2003

2009

2010

2013

2015

2016

2017

2018

To top