Research On The Currency Reform Of The Soviet Union In 1921-1924

After a long-term evolution of the Russian monetary system,the gold standard had finally been established by the end of the 19 th century.However,the once rocksolid system began to disintegrate due to the impact of the First World War.Neither the Tsarist Government nor the Provisional Government could end the ruble's slide.The problem was further exacerbated by the fact that the Russian Civil War broke out when only several preliminary measures had been taken by the Bolsheviks after the October Revolution.Despite its contribution to the victory of the civil war,War Communism also led to the disintegration of commodity-money relations,which in turn triggered public backlash and brewed a political crisis.During the transition to the New Economic Policy(NEP),a monetary reform is imperative due to the poor currency circulation in Russia.The monetary reform in the Soviet Union of 1921-1924 was carried out by the Narkomfin led by Sokolnikov.The reform could be divided into three stages.In the preparatory stage,how the reform should be brought about was heatedly debated,and it was decided that a new gold-backed currency would be issued with the original currency remaining in circulation.In the following implementation stage,the government authorized Gosbank to issue banknotes called “chervonets” and took a series of measures to stabilize the Sovznaki.As a result,a system of dual currency was finally established in 1923,indicative of phased achievements of the reform.In the final completion stage,as the government failed to balance the share of the two currencies in the money supply,the Sovznaki depreciated rapidly as a result of the increasing share of chervonets,and people began to flee.The state decided to issue treasury notes and coins with a fixed rate to chervonets,and withdrew the unstable Sovznaki from circulation,bringing an end to the monetary reform.The monetary reform of 1921-1924 equipped the Soviet Union with a stable currency system,facilitating the development of business and public finance,agriculture,industry,and domestic and foreign trade.The success of the monetary reform also consolidated the nascent Soviet regime,promoted the diplomatic recognition of the Soviet Union,and improved its international status with chervonets going global.However,after the death of Lenin,there was an intensified debate on the NEP,and Stalin,who won the power struggle,decided to abandon the NEP and carry out national industrialization and agricultural collectivization instead.Consequently,the currency system bore the brunt.As overseas transactions were closed and the domestic equivalent exchange mechanism was undermined,chervonets became a non-convertible currency and was finally abolished in 1947.