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

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.

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Bank (Central Bank) V.V. Gera-shchenko, as well as economists A.N. Illarionov and L.M. Grigor’ev, the amount of money withdrawn from circulation not only did not bring results in the fight against “shadow” capital, but even almost did not change the situation with excess money supply.¹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 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, cooperatives, rental contracts, etc.) and the expansion of various incentives and benefits for employees of state enterprises and organizations. The councils of labor collectives also played their role, putting pressure on the administrations of enterprises and organizing strikes demanding higher salaries. In 1990, there was also a significant increase in pensions and benefits (by 12.7% compared with 1989). The incomes of rural residents were affected by the expansion of the use of contract prices for certain types of agricultural products that were given to the state and cooperatives.

Characteristically, the growth of wages usually was not linked to the actual results of economic activity. Large capital investments in the production sector did not bring the proper return due to the long construction time, increase in the volume of “work in progress,” and decrease in discipline. Against the background of falling economic indicators, including a decrease in the volume of standard net output, a reduction in payments to the budget, and deductions to economic incentive funds, enterprises almost universally increased payments from material incentive funds. At the same time, by 1988, control over income growth was lost due to the abandonment of administrative methods for planning labor costs.

In accordance with the legislation that was in force at that time, the payroll fund consisted of the wage fund and the material incentive fund. While the first depended on production volumes and was regulated by various standards, the second was formed solely at the expense of profit, the value of which was significantly influenced by the use of contract prices and allowances. During 1988–1990, the State Bank repeatedly submitted proposals to the Council of Ministers and the State Planning Committee of the Soviet Union to change the procedure for the formation of payroll funds, but they did not find support.⁹ Moreover, the normative ratio between the increase in average wages and labor productivity was legally abolished in 1989. The introduced tax on the growth of the payroll fund did not bring the expected results, amounting to no more than 10% of the material incentive funds.

In early 1990, a special interdepartmental commission headed by the First Deputy Chairman of the Council of Ministers of the Soviet Union L.A. Voronin organized an audit of more than 200 enterprises and organizations of eight national economic complexes for compliance with the standards for the formation and expenditure of funds for wages.¹⁰ As a result, it was revealed that in a number of cases the increase in the payroll fund was due to the manufacturing of more profitable products. However, the increase in wages was for the most part caused by unreasonable overpricing of manufactured products. There were also cases of violation of the procedure for calculating the payroll fund. So, for example, the Odessa Plant of Heavy Crane Building named after the January Uprising of the Ministry of Heavy Engineering of the Soviet Union overstated the basic payroll by one million rubles (8%) in 1989 due to the inclusion of funds from the material incentive fund, as well as the use of additional appropriations from the ministry. Despite the increase in wages, the company allowed a reduction in the volume of production by 5.1%. The Lakokraska Yaroslavl Production Association reduced the volume of production by more than 5% in 1989, while payments from the material incentive fund increased by almost 9%.¹¹

Of particular note are the cases of violations of the requirements of Council of Ministers Resolution no. 372 as of May 4, 1989, according to which the payroll fund of a state enterprise was subject to reduction in the event that contracts for the performance of part of the production work were concluded with cooperatives. For example, production cooperatives were organized on the basis of the workshops of the Mariupol Metallurgical Plant and Oskol Electrometallurgical Plant. In this regard, wage funds at these enterprises were subject to a reduction by 1.4–1.5 million rubles,¹² which was not done. The Lenin Izhevsk Gear Plant signed contracts with five cooperatives and transferred to them part of the work on the manufacturing of components. Despite the decrease in the volume of production work, the plant increased the wage fund by 400 000 rubles.¹³

In 1990, consumer spending by the population increased by almost 15% compared to 1989, exceeding even planned calculations.¹⁴ This was explained both by a certain expansion in the production of consumer goods¹⁵ and an increase in imports and by an increase in average retail prices (25% of the increase in trade) and an increase in sales of alcoholic products (10%).¹⁶ In general, the situation in the consumer market was characterized by a high shortage of most commodity items. Many food products were lacking in sales (primarily livestock products, fish, confectionery, potatoes, vegetables, and fruits). The demand for many products of light industry, household goods, and building materials was not satisfied either. This was explained not only by the high growth rates of monetary savings, but also by the increased rush demand for almost all types of goods, which was caused by inflationary expectations and rumors about a possible monetary reform and “freezing” of deposits in the Savings Bank. Even durable goods were “swept away” from the shelves: electric kettles, irons, tape recorders, and radios.

According to various estimates, unsatisfied demand due to a lack of goods and services amounted to 105–110 billion rubles in early 1990 as opposed to 60 billion in early 1986.¹⁷ This indicated a serious disorganization of the consumer market. Of the 989 types of consumer goods that were monitored, only 106 items (11%) were on free sale without significant interruptions.¹⁸ Sales of salt, matches, laundry soap, cereals, and flour increased. People seriously feared for tomorrow and tried to spend the available money by any means. Great difficulties arose with the provision of meat products to the populations of Moscow, Leningrad, and other large cities. The production of canned fruits and vegetables, soft drinks, and tobacco products decreased. Plans for the production of goods for public and household purposes were ruined.¹⁹

The instability of the situation was also evidenced by the intensive purchase of unpopular and stale goods, the stocks of which, which had changed little in the past, began to decline sharply. For 1988–1989 they decreased by more than two times.²⁰ Increased buying of expensive goods was recorded. Thus, the sale of jewelry in 1989 increased by 2 billion rubles compared to the previous year, i.e., almost 1.5 times. The difficulties associated with the purchase of televisions, refrigerators, and furniture, the production volumes of which ensured uninterrupted sales as far back as 1986, became especially acute. People often bought things they did not need, and then exchange and resale began.

In September 1989, the All-Russia Public Opinion Research Center conducted a study to determine the level of satisfaction of the population with the quality and availability of food items. The overall assessment of the situation was negative. Thus, 86% of the respondents noted that the situation had worsened over the past few years, 56% pointed to a significant increase in prices, and 41% named the absence of cheap goods for sale among the most acute problems. With regard to the problem of shortages, 72% of survey participants complained that they often or constantly could not purchase necessary products; 60% spent a lot of time looking for them and standing in lines; 16% had to travel regularly for groceries to another city or region. Only 5% of the respondents had no problems in providing their families with products. Many were annoyed by cheating in counting and weighing and trade from the “back door.”

The consumer mood of the population in early 1990 was eloquently commented on by the deputy of the Soviet Union N.I. Travkin: “I remember one program of Moscow television. A reporter interviews a woman in line, ‘What would you like to buy?’ She answers, ‘My children should have woolen socks.’ The reporter asks a man, and he replies, ‘A razor.’ The reporter addresses the queue, ‘Comrades! I’m not talking about a specific counter, but in general—what do you dream of buying?’ One woman tensely reflected and said, ‘A coat!’ The bar of needs cannot be lower. What is necessary for life today is the pinnacle of my dreams. Maybe someone wanted to say, ‘I want to buy a car,’ but he was afraid. A line of angry people surrounds him; they will look at him as if he were a stranger. Not our man. The desire both to consume and to talk about it has been killed.”²¹

A separate problem is the activities of the cooperative sector, on which great hopes were pinned at the beginning of perestroika. Over the 3–4 years that had passed since the adoption of the law on cooperation, the volume of work and services in this area really increased. But cooperatives created mainly to improve public services and saturate the market with consumer goods performed a significant share of the work for state-owned enterprises, from which, for example, they received almost 90% of their revenue in the first half of 1990. Thus, the payroll fund in them was formed not at the expense of consumer spending of the population, but from the public sector. Taking into account the uncontrolled growth of wages in cooperatives and the focus of many of them on cashing out large amounts of money, the development of this sector actually formed a new sphere of cash circulation, which was almost not linked to commodity circulation.

In general, according to the results of 1990, the increase in the production of consumer goods amounted to only a third of the planned increase. By autumn, the volume of stocks of those in the retail network was 27% below the established standard. In a number of regions, it was necessary to introduce coupons for the purchase of certain food products (sugar, meat, vegetables, butter, macaroni, and sweets). In some regions, alcoholic beverages were also added to this list. At the same time, money was “attracted” to large cities (primarily capitals of the republics), which indicated that there were no shifts in meeting consumer demand in the rest of the country, especially in rural areas and small towns.²² As a result, according to the data of Moscow shopping center GUM, 60% of purchases were made by visiting buyers. In other metropolitan department stores (Prague, Leipzig, and Belgrade), the proportion of visitors was even higher (70–74% and up to 83% for garments and knitwear).²³ Compared with 1965, by the end of the 1980s the population’s expenditures on the purchase of goods and payment for services increased 3.5 times, and the amount of money in circulation grew more than 7 times.²⁴

During the period indicated, an outflow of funds from deposits in Sberbank began. Attempts to tie up the released, “excessive” money of the population through the issuance of government targeted interest-free loans did not bring tangible results. The sale of loan bonds and treasury bonds to the population was very slow; government securities did not enjoy the confidence of citizens. Against this background, the decision taken by the government to buy back the bonds of mass loans of 1955–1956 in August 1, 1990 looked hardly far-sighted. Considering that an average of 85% of the amount of placed bonds was usually presented for payment, about 6 billion rubles had been saved by the population by the end of 1990. The clearly populist decisions of the Supreme Soviet of the Soviet Union, which provided for an increase in research grants, pensions, and child allowances in the second half of 1990 and stimulated state purchases of grain, also had a negative impact on monetary circulation. Due to these measures, the cash income of the population increased by another 9 billion rubles.

It should be noted that approximately 60% of the increase in money in circulation accounted for the expansion of the capacity of money circulation and, therefore, was natural. The remaining 40% represented the unsecured money supply.

Against the background of the rapid disorganization of money circulation and the growing money “surplus,” proposals were increasingly made at the sessions of the Supreme Council and in the media to conduct a reform in the country that would stabilize the situation and create a basis for the transition to market relations. In this regard, it is interesting that the implementation of the “Kosygin” reform in 1965–1969 also led to a sharp increase in the incomes of citizens. The money supply in circulation increased by 88%, while consumer spending grew by only 38%. However, there were no similar proposals. Admittedly, this spoke not so much about the success of government measures, but about the possibility of taking quick and effective measures to balance the income and expenses of the population. In the event of the threat of destabilization of monetary circulation, a certain amount of gold and other valuables was sold on the foreign market, and the proceeds were spent to purchase consumer goods and food abroad.²⁵

At the end of perestroika, some economists made proposals for the introduction of a parallel currency in the country (“new” rubles, certificates, etc.) and the sale of scarce goods for them. Thus, the implementation of the reform would be a protracted process in the course of which “new,” “privileged” money would gradually replace the old money. The concept of “reversible money”, which was proposed by the well-known economists V.D. Belkin and I.V. Nit, was widely discussed in the press. Later, this concept was also “adopted” in the political struggle by some deputies of the Supreme Soviets of the Soviet Union and the Russian Soviet Federative Socialist Republic.

As the authors of the project believed, the restructuring of the economy in the direction of subordinating production to the interests of the consumer and the transition from material and technical supply to wholesale trade under the conditions of the then existing monetary system were impossible. The establishment of wholesale trade required money, which was to be materially secured and convertible at least in domestic circulation. Such money (“reversible,” or “reform money,” as the authors called it) could be created in the process of selling goods and services to the population. Accordingly, it was proposed to transfer retail and service enterprises to the service by “reversible money” first of all. The proceeds would be credited to the supplying enterprises to special bank accounts (so as not to be mixed with the “old” means of payment). After mandatory payments, enterprises could freely dispose of these funds—allocate them to pay salaries, make purchases from subcontractors, or invest in the modernization and expansion of production. At the next stage, allied enterprises would pay “new” money to suppliers, and so on. As a result, “reversible money” would penetrate through a chain of technological links into the entire national economy, including the system of credit and settlement services. At the same time, as the authors believed, even if enterprises spent all the “new” money on wages for employees, there would be no surge in inflation, since goods already sold would be behind this money.

Belkin and Nit’s project was thoroughly considered at the State Bank, as well as by a number of foreign experts in the field of monetary circulation. As the chairman of the bank Gerashchenko reported to the federal government, the concept was based “on incorrect theoretical premises and therefore turned out to be unfeasible from the point of view of credit, operational banking technology, and accounting.”²⁶ This determined the fate of the concept of “reversible money.”

Let me consider in more detail the objections of the State Bank. According to its employees, Belkin and Nit ignored the fact of the credit origin of money. The latter (including noncash means of payment) came into circulation when banks issued loans and went out of circulation when debts were paid off. In other words, in the course of the process of economic reproduction, money was constantly advanced by banks on account of a loan, while the final sale of the created product led to a reduction in the money supply in circulation. The logic of “reversible money” was exactly the opposite: it was created in the process of selling goods and services to the population.

In addition, the authors did not take into account seasonal and random statistical fluctuations in the sale of consumer goods, i.e., the mismatch in time between production and sale of products. It is thanks to these seasonal gaps in the circulation of goods that credit money exists. The coincidence of these processes in time would lead to the emergence of natural exchange, since there would be no need for an additional instrument that performs monetary functions. However, Belkin and Nit, discarding the seasonality factor, insisted that new money must come into circulation in a strictly dosed manner, only after the sale of goods to the population. In reality, as world practice testifies, this is impossible, since economic life itself is not dosed.

“Reversible money” did not have an anti-inflationary effect either, since the replacement of old money with new money at a ratio of 1 : 1 did not affect the change in supply and demand in the wholesale market.

As for the entry of new money into circulation through the exchange for foreign currency of “export origin,” then, as the State Bank noted, this mechanism would not have a significant impact on the material and financial balance either: in the case of the issue of money against foreign exchange assets received from exports, the money supply increases while its commodity content is reduced (after all, goods left the domestic market abroad)—the inflationary effect of “currency” emission is well known in world practice.²⁷

By the way, the State Bank itself, which opposed the monetary reform as such, offered its own “recipes” for restoring the financial and material balance. The stake was placed on the development of various forms of investment of the population: the acquisition of shares in enterprises, lease contracts, the free purchase of apartments and land plots, the organization of small private industries, the purchase of small enterprises from the state, etc.²⁸

Despite the significant number of proposals discussed, the exchange of money is associated primarily with the name of V.S. Pavlov, who headed the Cabinet of Ministers of the Soviet Union in January 1991. As Pavlov himself wrote, he took up the preparation of the reform at the beginning of perestroika, shortly after taking office as First Deputy Minister of Finance of the Soviet Union. According to his plan, it became part of the market reforms and preceded the restructuring of the economy and the reform of pricing. The ultimate goal of all monetary and price reforms was to remove the excessive inflationary pressure that increasingly threatened the economy, increase the purchasing power of the ruble and bring the new structure of production in line with the new price structure. As Pavlov believed, the laws of competition and the market would work only under such conditions.²⁹ A side goal was the partial withdrawal of the illegal income of “shady business,” following the example of the introduction of gold coins in 1922, which depreciated the capital of the “black market.”

As early as 1989, Pavlov showed Gorbachev sketches of new money, but the Secretary General did not make a final decision then, because “at that moment the question of monetary reform seemed to him infinitely far away,” and he did not really want to think about it.³⁰

Nevertheless, in 1990, the production of new money was in full swing. For this purpose, Goznak’s production capacities were expanded and the necessary equipment was purchased from abroad. No specific date was set for the exchange, but the technical preparations were scheduled to be completed by the summer of 1991.³¹ However, the preparations for the reform had to be accelerated at the end of the year. As Pavlov explained, huge amounts of ruble cash, which could be used to organize financial sabotage against the Soviet Union, were concentrated abroad: “We have begun to be informed through many channels and from many sources that foreign financial and industrial circles are seriously preparing for the upcoming privatization in the Soviet Union. Very large sums were accumulated by men of straw and exported to the West, moreover, not only through the “shuttles.” Some commercial banks also joined this process. They acted on the same principle: they threw substantial sums of dollars into the Soviet Union and exchanged them at a black rate.”³² It turned out that the main threat to the stability of the Soviet currency was not the costly nature of the economy and the active flow of capital into the “shadow” sector, but something from the outside. At the same time, according to the State Bank, there were by no means tens of billions of rubles abroad, but only about 3–4 billion rubles.

It is noteworthy that Pavlov reported to the Council of Ministers on the inexpediency of conducting a monetary reform as early as the end of November 1990, given “the socio-political situation in society, the extremely tense situation in the consumer market, and the lack of commodity and foreign exchange reserves to maintain the purchasing power of the ruble after the reform in the event of its implementation.”³³ On January 10, 1991, speaking at a meeting of the Supreme Soviet of the Soviet Union, Pavlov assured the deputies that no preparations were underway for the reform. However, despite all the assurances, on January 22 the President of the Soviet Union signed Decree no. UP-1329, according to which the acceptance of banknotes of the State Bank of the Soviet Union in denominations of 50 and 100 rubles of the 1961 sample was stopped from 12:00 a.m. on Janua-ry 23 in all types of payments and they were exchanged for banknotes of a new sample. Pavlov gave the following explanation for the “surprise effect” when making the most important state decision: “Leakage of the most important, strategic information about the plans for the monetary reform could cause enormous damage to the country … Monetary reform is a too serious, big deal; it is prepared in the deepest secrecy.”³⁴

Citizens were given a three-day period for the exchange, from January 23 to 25 (from Wednesday to Friday). These days turned out to be very exciting for citizens (especially those of retirement age), who almost took savings banks by storm, fearing not to have time to exchange money earned by honest work. But the reform caused the most inconvenience to those people who were away. Immediately, the federal authorities and the State Bank began to receive numerous complaints and requests to extend the period for the exchange of old banknotes for those who were on long flights and business trips, in particular sailors, fishermen, railway workers, oil workers, military personnel of the USSR Ministry of Defense, people who were abroad, etc.³⁵ The reform did not take into account the specifics of the northern and other remote regions, in which the large scattering of settlements, the underdevelopment of the transport system, and delays in the delivery of newspapers did not allow exchange transactions to be carried out in such a short time. As a result, this period was slightly extended for some groups of the population.

Free exchange of money was carried out only within 1000 rubles. When a greater amount was exchanged, the decision was made by specially created commissions under local authorities, which worked until the end of March. By the way, the “Soviet millionaires,” whom this reform was to “punish,” successfully overcame minor obstacles in the form of these commissions and exchanged their savings through unofficial channels.

According to various estimates, the monetary reform made it possible to withdraw from 6 to 12 billion rubles from circulation; this is significantly less than the 30 billion that its initiators counted on.³⁶ Such very modest results could hardly solve the problem of excess money supply, especially since the emission far exceeded the amount of money withdrawn. At the same time, half of the issued mass was directed to cover the domestic public debt and budgetary expenditures, and only about 30% of this amount was used to provide loans to enterprises.

As for the incomes of citizens, they grew by 90% in 1991. The amount of cash in circulation reached 270 billion.³⁷ It is not surprising that the situation in the consumer market became even more aggravated, and the deficit became rampant. Store and market counters were emptied at an incredible rate. People reasonably believed that tomorrow all goods could disappear altogether, so they bought up the rest. In the first months, enterprises tried to hold back products, waiting for changes in pricing, but the April jump in retail prices³⁸ (April 2 was popularly named “Pavlov’s Day”) further destabilized the situation, provoking large strikes in many cities of the Soviet Union and leading to the need for 40% compensation of the rest of the bank deposits and the face value of government securities placed among the population. This price increase “had political and psychological significance: it was the first decision in the last decades of Soviet history to change almost all prices, which dealt a blow to the traditional Soviet mentality focused on their stability.”³⁹

However, despite the decline in public confidence in the authorities, Pavlov was sure that the situation in the economy had somewhat stabilized in the summer, and the merit for this belonged to his reform.⁴⁰ In reality, food commodities continued to be in short supply and the situation was exacerbated by a severe decline in production and disruption of food imports. The above monetary compensation to the population “preserved the monetary and commodity imbalance.”⁴¹ In the first nine months of 1991, production of 29 out of 34 food commodities, including butter, sugar, confectionery, and so on declined. Purchases of meat and dairy products decreased by 12 and 13%, respectively.⁴² Sale by coupons and orders was carried out with long queues, while some goods could be purchased with coupons with a delay of 2–3 months. In addition, as Pavlov himself admitted, the food problem had become so aggravated by August that negotiations with South Africa and South Korea on the purchase of corn and rice had to be started.⁴³

Market stocks of flour were drastically reduced; huge queues for bread lined up. Trade in vegetable oil and margarine was carried out everywhere strictly according to limits. A tense situation with the provision of baby food developed, including due to a reduction in its purchases abroad (for example, by 64% for baby food concentrates). The situation with light industry goods was equally unsatisfactory. Despite the increase in prices, there was a shortage of many types of clothing and footwear and especially rush demand for imported goods. One of the reasons was that light industry enterprises were not provided with raw materials. As a result, in the first nine months of 1991, the decline in the production of fabrics, clothing, and footwear amounted to 16–17%. This was aggravated by a reduction in deliveries between the republics of these products, which ranged from 30 to 50%.⁴⁴

A decrease in the production of civilian products was noted at the enterprises of the defense industries and the machine-building complex. The production of televisions, refrigerators, tape recorders, and other sophisticated household appliances decreased by an average of 15–20%.

It can be stated that the monetary reform did not lead to an improvement in the situation in the economy and, in particular, in the sphere of monetary circulation. The amount of money withdrawn from circulation was lost against the background of money and credit emission and did not allow eliminating the money “surplus,” even if we rely on the most overstated estimates. Store shelves in cities were completely empty in autumn. Retail trade began to be strictly regulated and carried out on coupons and cards. The “black market” flourished, and the population showed extreme discontent.⁴⁵ The growing budget deficit of the republics and the center and the significant diversion of credit resources for “patching holes” in the treasury did not allow stimulating the production of consumer goods and taking coordinated measures to control the growth of incomes of the population. As a result of disintegration processes, the banking system was divided, the banks of the Union republics often pursued a policy that was contrary to the interests of the stability of the common monetary unit. As a result, separatist sentiments escalated, which completed the collapse of the Soviet economy.