Monetary Circulation in the Soviet Union during the Late 1980s and Early 1990s: In Search of a Way out of the Crisis

ISSN 1019-3316, Herald of the Russian Academy of Sciences, 2022, Vol. 92, Suppl. 8, pp. S769–S776. © The Author(s), 2022. This article is an open access publication. Russian Text © The Author(s), 2022, published in Rossiiskaya Istoriya, 2021, No. 6. Monetary Circulation in the Soviet Union during the Late 1980s and Early 1990s: In Search of a Way out of the Crisis R. G. Kirsanov Institute of Russian History, Russian Academy of Sciences, Moscow, Russia e-mail: Received October 28, 2022; revised November 1, 2022; accepted November 1, 2022 Abstract—In the early 1990s, strengthening the monetary system and increasing the role of money in the development of the national economy were important conditions for the transition of the Soviet Union to the foundations of a market economy. As is known, stabilization of monetary circulation and reduction of inflationary processes can be achieved both through the implementation of monetary and anti-inflationary policies and through the implementation of monetary reform. This is the kind of reform that was carried out in the Soviet Union in early 1991. Keywords: monetary reform of 1991 in the Soviet Union, monetary circulation, consumer sector of the economy, State Bank, savings deposits DOI: 10.1134/S1019331622140064 Money is not only a complex economic category, but also a historical category. It has undergone a long evolution, during which its types and functions have changed and have gradually played an increasingly larger role in the development of economic relations. It is well known that the success of economic reforms largely depends on the state of the monetary system. It is no coincidence that, according to popular opinion in the economic environment, the economy of the state cannot be better than its national currency. In order to streamline and strengthen monetary circulation and transform the monetary system partially or completely, governments sometimes carry out reforms, which are usually accompanied by a decrease in the total amount of money serving the payment turnover. The content and historical experience of such reforms (including in Russia) show that three factors are necessary for success: production growth, a balanced budget, and the presence of gold and foreign exchange reserves. But, of course, each of the monetary reforms has its own characteristics. The subject of this article is the monetary reform of 1991, which was initiated and carried out under the leadership of the Prime Minister of the Soviet Union V.S. Pavlov. In the scientific literature, it is mainly assessed as an unsuccessful event that did not allow solving the declared tasks. Thus, according to the chairman of the State Bank (Central Bank) V.V. Gerashchenko, as well as economists A.N. Illarionov and L.M. Grigor’ev, the amount of money withdrawn from circulation not only did not bring results in the fight against “shadow” capital, but even almost did not change the situation with excess money supply.1 This opinion is also shared by V.M. Kudrov, who notes that the reform “caused panic among the population and even its anger.”2 As N.S. Simonov notes, its main consequence is not the withdrawal of unearned income of speculators and corrupt officials, but “the loss of public confidence in the union government.”3 M. Alekseev and A. Pachkalov urge not to consider the reform “a completely failed event, no matter how anyone would like to present it”; however, they base their position only on the opinion of Pavlov himself, who believed that “the monetary reform was a success, and 1 Krotov, N.I., Zhizn’ i udivitel’nye priklyucheniya bankira Viktora Gerashchenko, syna bankira Vladimira Gerashchenko, rasskazannye im samim, ego druz’yami i kollegami, vnimatel’no vyslushannye i zapisannye litopistsem Nikolaem Krotovym [The Life and Amazing Adventures of the Banker Viktor Gerashchenko, the Son of the Banker Vladimir Gerashchenko, Told by Himself, His Friends and Colleagues, Carefully Listened to and Recorded by the Chronicler Nikolai Krotov], Moscow, 2010, p. 338; Illarionov, A., Popytki provedeniya politiki finansovoi stabilizatsii v SSSR i v Rossii [Attempts to pursue a policy of financial stabilization in the Soviet Union and in Russia], Voprosy ekonomiki, 1995, no. 7, pp. 4–37; Grigoriev, L.M., Ekonomika perekhodnykh protsessov [Economics of Transitional Processes], Moscow, 2010, Vol. 1, p. 58. 2 Kudrov, V.M., Ekonomika Rossii v mirovom kontekste [The Russian Economy in the Global Context], St. Petersburg; Moscow, 2007, p. 457. 3 Simonov, N.S., Ocherki istorii bankovskoi sistemy Rossii, 1988– 2013 [Essays on the History of the Banking System of Russia, 1988–2013], Moscow, 2016, p. 88. S769 S770 KIRSANOV subsequent problems associated with it were caused by the separatism of the Russian government.”4 At the same time, studies devoted to the economic development of the Soviet Union in the late perestroika period usually do not give detailed analysis of the reform. In particular, its relationship with the dynamics of money circulation within the state of the consumer sector of the economy is not studied. It is this gap that this work aims to fill. Historically, monetary reforms are perceived in the public mind in a utilitarian way—as measures that affect only the savings of the population. In reality, these are complex transformations that relate to cash and noncash transactions; the exchange of money leads to revaluation of the cost of fixed and current assets, building new proportions designed to balance the income and expenses of the population and business entities. The monetary incomes of the population increased by 41.4 billion rubles during 1988, by 63.8 billion in 1989, and by 83 billion in 1990, while they grew by only 78 billion for all the years of the 11th Five-Year Plan (1981–1985). At the same time, the growth in the incomes of citizens “overtook” the growth of all the main indicators characterizing the development of the economy (and, in particular, consumer spending of the population) by 1.4 times.5 By the end of 1988, the volume of savings of the population exceeded the stocks of material values and commodity resources by 5 times.6 The rest of the deposits of the population (including certificates) as of January 1, 1989, amounted to 296.7 billion rubles. During this year, deposits and other savings increased by 44.9 billion, reaching 341.6 billion rubles by January 1, 1990.7 A significant part of these funds can be considered as pent-up demand. However, a part of the cash supply must also be added to it, since a certain proportion of the population (especially in Central Asia and the Transcaucasus) did not use bank deposits. Such savings amounted to about 37 billion rubles in early 1990.8 The main increase in the income of the population (75%) was caused by an increase in wages due to the wide development of new forms of economic activity (self-supporting with income distribution, coopera4 Alekseev, M. and Pachkalov, A., Ministry fi (...truncated)