New Ruble Has Russians Counting Their Kopecks
By Daniel Williams
But that was before the kopeck, Russia's ancient coinage, disappeared in the undertow of inflation during the early 1990s, before the ruble began to be denominated only in the hundreds and thousands, and even the smallest change was returned in rubles.
Well, the kopeck is back, newly minted, along with a new slimmed-down ruble. They made their first appearance today, the fruit of a decision by President Boris Yeltsin to return small-denomination currency to Russia as a sign that the days of economic uncertainty are over.
Officially, Russia trimmed three zeroes from the ruble Jan. 1. But New Year's Day is a national holiday, so no banks were open to issue the new notes. Only today did Russians put their hands on them. The Central Bank set the dollar exchange rate at five rubles, 96 kopecks instead of 5,960 rubles. Subway rides, instead of costing 2,000 rubles, cost two.
Introduction of the new ruble was greeted with calm, although it created some confusion for bankers, merchants and shoppers used to dealing in denominations of thousands for even the smallest of transactions.
"Take everything and count it again!" growled Central Bank employee Vera Maliutina to a teller who was fumbling with stacks of coins.
Her workers were busily handing out new money to representatives of commercial banks, mostly in preparation for next week, when full-scale business resumes. "This teller already got confused," Maliutina said.
When Yeltsin announced the ruble plan last summer, he hailed it as a sign that the days of high inflation were over and that Russia's economy was set for growth after a seven-year depression. "New zeroes will never again appear on our bank notes," he said.
Russians were wary because Soviet-era currency redenominations were disguised devaluations. To ease their fears, the government is giving Russians time to get accustomed to the new bills. They can use the old currency for purchases throughout 1998 and will be able to exchange old bills for new ones at designated banks until the year 2002.
Russian officials worried, too -- about instant inflation. Central Bank chairman Sergei Dubinin pledged that the government would not use the transition period, when both types of rubles will circulate, to flood the market with new rubles. Dumping excess rubles into circulation could be used to make up for lax tax collection, pay off chronic salary arrears and rebuild decayed public services. But it would also lead to higher inflation, economists say.
On Thursday, Dubinin said new bills will be put into circulation only as old bills are retired. "There will be no secret emission, no covering of the budget deficit by the newly issued bank notes," he promised.
The government also is concerned that businesspeople will raise prices on the theory that customers are less likely to notice, say, a 50-kopeck increase than a 500-ruble increase. To reduce the chances of exploitation, the government is forcing merchants to post prices in old and new rubles.
Some retailers already were trying to outwit the government, customers at a central Moscow market complained. "Condensed milk was 3,800 rubles last week and it's 4,200 today," said a woman bundled against the cold. "So what if they put the price also in new rubles?"
On the surface, the change is purely mechanical, but it takes some mathematical talent to keep track: One, five, 10 and 50 kopeck coins replace ruble coins and small bills; one and two ruble coins for the 1,000 and 2,000 ruble bills; five ruble coins and notes for the 5,000 ruble note; 10, 50, 100 and 500 ruble bills for the old 10,000, 50,000, 100,000 and 500,000 notes.
To make things easier, the new bills resemble the old rubles, except for the change in denomination and some added anti-counterfeit marks. "It will be easy to count without so many zeroes," Yeltsin explained.
A customer at a Moscow savings bank disagreed. "I think this is indeed a problem. What about old people who come to the market and mistakenly give away the wrong bills? A lot is going to depend on honest cashiers."
But a passerby praised the move. "What did we need these zeroes for? Now a ruble is a ruble. You can even buy a pastry for your child with it."
Russians have good reason to be cautious about a redenomination. In 1993, Yeltsin ordered an exchange of Soviet bills for new Russian currency. Citizens were given only three days to exchange their old rubles. It was a time of high inflation, and nervous Russians rushed to buy consumer goods for fear of losing the cash value of their rubles.
During the Soviet era, Josef Stalin and Nikita Khrushchev ordered the exchange of old rubles for new, each time at a 10-1 rate. The catch was this: A widget that cost 10 rubles before the exchange still cost 10 rubles afterward, instead of only one (the state set the price). The kopeck did not take care of the ruble -- in effect, the old rubles had lost 90 percent of their value.
© Copyright 1998 The Washington Post Company