CHERVONETS

A gold-backed currency introduced by the Soviet government in 1922 as part of the New Economic Policy (NEP).

The Soviet Union did not possess a stable currency at the end of the civil war, and the government realized that it could not achieve its ambitious economic development plans without first solving this pressing monetary problem. Accordingly, a Sovnarkom decree of October 11, 1922, authorized the Soviet state bank to issue the chervonets bank note as the equivalent of the prerevolutionary tenruble gold coin (7.74232 grams of pure gold). This legislation required at least 25 percent of chervontsy (plural) to be backed by precious metals and hard currency. The first paper chervontsy appeared in December 1922, and in 1923 the state bank (Gosbank) also began issuing gold chervonets coins (primarily for use in foreign trade). The chervonets circulated alongside the rapidly depreciating sovznak ("Soviet note") ruble until February 1924, when the state bank began to withdraw the sovznak ruble from circulation and established the chervonets as the country's sole legal tender, equal to ten "new" rubles. Through the 1920s, the chervonets was officially quoted on foreign exchanges. However, this attempt to maintain a "hard" Soviet currency was controversial almost from its inception and quickly ended along with the NEP itself. On June 9, 1926, the government passed a resolution forbidding the export of Soviet currency abroad, and in February 1930 Soviet currency was withdrawn from foreign exchanges, and private exchanges of foreign currency for chervontsy were banned.

See also: new economic policy; ruble

bibliography

Goland, Yurii. (1994). "Currency Regulation in the NEP Period." Europe-Asia Studies 46(8).

Gregory, Paul R. (1994). Before Command: An Economic History of Russia from Emancipation to the First Five-Year Plan. Princeton, NJ: Princeton University Press.

Juliet Johnson