Coupons and the Ruble Zone

Posted on 7/21/2020

Cash shortages prevented the curb of inflation and forced some countries in the Ruble Zone to adopt coupons as their sole currency.

Prior to the collapse of the Union of Soviet Socialist Republics (USSR), the republics of the Union used a dual circuit monetary system with the Russian Ruble as its currency. The Dual Circuit Monetary System was set up in which Russia was the sole issuer of cash rubles, but its republics could issue ruble credits through their banking system.

After the collapse, the former republics turned into nations, but continued using the dual circuit monetary system. The ongoing use of the Russian ruble formed what was known as the Ruble Zone. But shortly after its creation, an economic crisis broke out across the former Soviet Union.

The Ruble Zone was comprised of the 15 former republics of the Soviet Union. During the Soviet era, many of the republics’ expenses were paid or supplemented by Russia in some form. After the collapse of the USSR, many of the new nations continued utilizing similar budgets and issuing debt through the dual monetary system but were no longer supplemented by Russia. Large sums of debt accrued for many of the former republics, but they lacked the tools to offset their deficits. Ultimately, inflation and a cash shortage ran rampant in the Ruble Zone.

The cash shortage forced many of the Ruble Zone countries to issue coupons beginning in 1991. Azerbaijan, Belarus, Georgia, Latvia, Lithuania, Moldova, Uzbekistan and Ukraine all issued a currency coupon in some form. The coupons were used along with rubles for the purchase of essential goods in hopes of curbing inflation. As time progressed in the Ruble Zone, a continued cash shortage prevented the curb of inflation and forced some countries to adopt coupons as their sole currency.

However, the coupons also suffered inflation. Ukraine, for instance, soon went from issuing Karbovanets (coupons) denominated from 1 to 100 in 1991, to 2,000 to 1,000,000 in 1993. Ukraine's coupons can be found in the World Paper Money Price Guide under the Pick numbers of 68–101.

Ukraine, National Bank, Pick# 90a*, 1992,
500 Karbovantsiv, Replacement / Star, front
Graded PMG 65 Gem Uncirculated EPQ
Click image to enlarge.

Russia did try to control inflation of the ruble, but the policies exacerbated it. One policy that was particularly detrimental to the Ruble Zone was the printing of a new ruble. The new ruble was printed in Russia in 1993 and was not distributed to the other countries of the Ruble Zone. Russia then announced that it would no longer take payments in Soviet-era rubles to service the former republics’ debt. The former republics were given an ultimatum: Either leave the Ruble Zone or give all monetary control to Russia. After this announcement, along with the ruble's inflation rate topping 2,000 percent, no country agreed to cede monetary control to Russia.

After Russia’s ultimatum, the Ruble Zone eventually was dissolved in 1995. All the countries issued their own currency after leaving the Ruble Zone, but not without growing pains. The 15 post-Soviet countries continued to suffer high inflation, and all had to revalue their currencies at least once.

Few of the former Soviet-era coupons and rubles have been seen by PMG, making them an uncommon registry set to complete. Check out the PMG Registry and see how your Ruble Zone notes stack up.


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