Russians Return To Small Change: Kopeck Is Back
Russia's top central banker announced yesterday that he would soon be reintroducing into the wild a species previously thought to be extinct - the kopeck.
Three zeroes will be struck from Russia's inflation-ravaged ruble Jan. 1, Central Bank chairman Sergei Dubinin declared, making one new ruble worth a thousand old ones. And with a new ruble worth a whopping 20 cents, there will be a need for kopeck coins again.
The kopeck was last sighted in Russia in early 1992, disappearing in a blizzard of hyperinflation that made the national currency literally worth less than the paper it was printed on.
Kopecks, once the mainstay of the Soviet household budget, became worse than useless. A box of matches that used to cost one kopeck today costs 100 rubles - 10,000 times as much. The five-kopeck Moscow subway ride of Soviet urban folklore is now a fairy tale: The same ride nowadays costs 40,000 times more: 2,000 rubles, or the equivalent of 35 cents.
These sorts of price increases became typical of the post-Soviet Russian economy, racing infinitely far ahead of wage increases. Mr. Dubinin hopes that his new currency reform will signal a calmer period ahead for the Russian economy.
The decree that President Boris Yeltsin signed yesterday introducing the new ruble "will draw a line under an economic epoch that began in 1990-1991 and will end in 1997-1998," Dubinin told reporters. "We are putting a full stop not only to inflation but to economic decline."
The changeover to new bank notes and coins is being handled in as undramatic a fashion as the government can manage - with five months' advance warning, dual pricing on price tags for a while, and a five-year transition period when old rubles will remain legal tender. And, aside for the three missing zeroes, there will be no changes to the notes themselves.
Officials hope this will allay the fears of citizens, for whom past currency reforms have been sudden nightmares that confiscated their savings.
FResh in everybody's memory are repeated reforms since perestroika (or restructuring) began in the late 1980s, which ended up taking money out of Russians' pockets. In one instance, people were given only three days to change 50-ruble and 100-ruble bills (and only a limited number of them) before they became worthless.
Another time, the government froze everybody's bank accounts, allowing account holders to withdraw only 500 rubles. The rest of their money, locked in the bank, evaporated in a matter of months because of hyperinflation.
The new reform, Dubinin insisted, "is not at all a confiscatory measure, nor will it have side effects. The change of scale in prices will be the same as for the currency, and it will all happen without any losses to the population."
And a box of matches will cost kopecks again.