The History of Money: From Animal Skin to Online Payments

12.06.2020 The History of Money: From Animal Skin to Online Payments

A special post to celebrate the Russia Day

Today, on June 12, we celebrate the Russia Day, a nation-wide public holiday.
We decided to use this occasion and share with you some information about the topic we know best ─ money. For centuries, money has played and continues to play a vital role in the economic and even political life of Russia, not to mention its important place in the wallets of Russian residents.

First money

We do not know for sure when the first money appeared on the land occupied by Russia today, but we do know that by the time of the summoning of the Varangians (Vikings) in the 9th century, trade and monetary relations had already been quite established. However, since medieval Rus’ did not have its own silver mines at that time, foreign money was widely used, mostly Arabic coins, and sometimes Western European coins in the north-west of the country.
The traditional trade route, known as the ‘Great Route from the Varangians to the Greeks’, required peace and order all along the way to properly function, and this sparked the emergence of the first medieval Russian principalities (states).
The new leaders of states ─ princes – gradually began to mint their own coins, and each principality had its own coins, but common names for certain types of coins were used, and all of them had more or less the same weight. Weight was important since the coins were made of silver, and it was the share of this precious metal that determined their value.

On the other hand, foreign coins were still in circulation, and here too the content of silver was more important than their place of origin.

Along with metal coins, people continued to use other types of money like cattle and furs. Later, some coins were called kuna (marten) and veveritsa (squirrel).

Double veveritsa In the middle of the 10th century, Arab dirhams cut into circles appeared in the Kursk region. Their weight was close to 0.68 g (double veveritsa), which was the standard weight of German pfennig and Friesland pfennig and half of the weight of rezana used in the southern weight system.

Двойная веверица. В середине X века в «Курской земле» появляются обрезанные в кружок арабские дирхемы, близким к весу в 0,68г. (Двойная веверица), равной весовой норме германских пфенингов и пфенингов фрисландского типов и половине резаны южной весовой системы.

It was at this time that money changer became a special profession, and an important one, since a wide variety of coins in circulation was not very convenient for trade.

The emergence of the rouble

Because of the Mongol invasion and the long-term control of the Mongol Empire which followed, medieval Rus’ entered a period which is usually called ‘coinless’. The inflow of foreign currency was interrupted, and Rus’ states stopped producing their own coins since coin minting was generally regarded as the privilege of the sovereign (ruler), and the only ruler they had at that time was the Great Khan of the Mongol Empire.
At the same time, it would be wrong to say that money in Russia disappeared altogether ─ it just had to transform. Hryvnias, i.e. silver bars with a weight of around 200 g, were widely used, and it was at this time that the term ‘rouble’ appeared (‘rouble’ stood for a fragmented piece of hryvnia since the Russian word ‘rubit’ means to chop or hack). The coinless period continued up until the 14th century, when Rus’ was finally able to set itself free from the Mongol Yoke. After that, principalities began to mint coins again.

Гривны, от которых отрубались «рубли»

A single monetary system

The next big step in the history of Russian money was the introduction of a single monetary system across principalities, which was initiated in 1535 by the Grand Princess Elena Glinskaya, the mother of Ivan the Terrible. She united Moscow and Novgorod denga (the name of the main coin in circulation at that time), introduced the kopeck (this name goes back to the image of a horseman with a spear, St George the Victorious, who was the patron saint of Moscow and whose image was engraved on the coin. The Russian word for spear is ‘kopyo’, hence the name ‘kopeck’). The single monetary system was instrumental in the creation of the Russian Empire by Ivan the Terrible.

Первая копейка 1535 года

The Time of Troubles, which followed the death of Ivan the Terrible, affected Russian monetary system among other things. Kopecks produced by various sovereigns circulated across the country, including those minted by several pretenders to the Russian throne commonly referred to as False Dmitriys, a Polish coin, and even piastres. The Nizhny Novgorod Second Volunteer Army led by Minin and Pozharsky started producing their own money in Yaroslavl on behalf of the deceased tsar Feodor I, who was the last representative of the Rurik dynasty on the Moscow throne. This was a kind of political manifesto meaning that things should get back to normal, i.e. to the way they were in the times of fathers and grandfathers.

For a long time, the rouble was nothing but a unit of measurement without any physical medium. The first Russian rouble as a coin was minted under the tsar Alexis I, the father of Peter I. During the reign of Peter I, rouble was finally incorporated with the country’s monetary system and became a convertible currency. Rouble had the same weight and size as the thaler, the global currency of that time.

Первый русский рубль

‘Katyenka’, ‘Petrusha’ and the ‘Orlov Printing’

Paper money, the so-called assignation rouble, was first introduced during the reign of Empress Catherine II on December 29, 1768. The country was at war with Turkey and in desperate need of funds. Silver roubles were either stashed in people’s homes or sent abroad in exchange for military equipment and food. One peculiar detail in the history of Russian currency is that the portrait of Catherine II was placed on the one-hundred rouble banknote of the last currency ever produced by Russia as an Empire. Russian people affectionately called these banknotes ‘katyenka’ (the diminutive form of the name Catherine). The highest denomination banknote under Nicholas II was 500 roubles, which depicted Peter I, hence the name of these bills ‘petrusha’ (the diminutive form of the name Peter).


During the French invasion of Russia in 1812, Napoleon tried to flood Russia with fake money in hope that it would ruin the national economy, but his plan failed.

A story of Russian currency would not be complete without mentioning Ivan Orlov, who invented multicolour printing in one run in 1890. The new printing technology allowed to raise the production quality of banknotes and securities and significantly reduce the quantity of fake money. Orlov’s printing method subsequently spread throughout the world.

Орловская печать, Госзнак, подарочная банкнота с портретом Ивана Орлова, 2002 год

Gold, silver and paper

From the times of Catherine II until the fall of the Russian Empire, Russia used to have two currencies with different values ─ a silver rouble and a paper rouble. The latter depreciated during wars, for example, during WWI it was worth no more than 25 kopecks in silver. For a brief period of time, a golden rouble, introduced by the Minister of Finance Sergey Witte, was in circulation, which had tremendous economic effects. However, the short golden rouble era ended with the outbreak of the Russo-Japanese War.

10 золотых рублей Сергея Витте

2,000 currencies of the Russian Empire

The fall of the monarchy and the transfer of power to the Provisional Government resulted in the Russian rouble plummeting straight into the abyss.
The value of the money produced by the Provisional Government, the so-called ‘kerenkas’, was so low that people had to pay using metres of banknote paper without even cutting it into separate bills. The October Revolution and the Civil War which followed did not do any good to the Russian currency, as well. Across the former Russian Empire, around 2,000 different currencies were used, and in some cases the only collateral you could get was the word of honour of those who produced that money. Even in the White Army, the only commander capable of producing money backed by gold was Alexander Kolchak who gained access to almost half of the empire’s gold reserve after taking Kazan.
The Red Army of the Semirechye region used a rather exotic collateral ─ opium, and so did some other armies.
In the Russian Far East, Peter Shimada, who was ethnically a Japanese, printed his own money, which was very popular among the population. At the same time, people living in Yakutia used wine labels with overprints instead of money.

 250 рублей Красного Семиречья. «Кредитные билеты обеспечиваются опием, хранящимся в Государственном банке»

Money in the Soviet Union

The topic of Soviet money actually deserves a special post because of the raging hyperinflation and non-stop monetary reforms of those times. Without blinking an eye, the Bolsheviks started to blatantly print the ‘tsarist’ five-rouble banknotes (their only difference from the authentic standard dated 1909 was the length of the serial number) and mint ‘tsarist chervonets’ which was used to pay for their purchases abroad.

The new USSR government celebrated their victory in the Civil War by introducing a new golden chervonets in 1923. This new currency stabilised the country’s financial system and was widely used in international financial operations.

  • In 1975─1982, the State Bank of the Soviet Union continued to mint coins following the chervonets standard but with different dates.

Up until the end of the WWII, the Soviet Union had a peculiar double-currency system relying on both rouble and chervonets (by that time it was turned into a banknote instead of a coin). Lenin’s portrait was first featured on Soviet currency in 1938, on that same chervonets, even though the USSR government had been mulling over similar plans back in the 1920s. The last time Lenin’s image was printed on national currency was in 1992, when he was featured on the two-hundred rouble banknote (this is when this denomination was used for the first time, and after that 200-rouble banknotes appeared in 2017 in the Russian Federation).

New visual standards for Soviet banknotes were developed in 1938. For the first time ever they featured military themes: a three-rouble note had the image of marching soldiers in full gear, and the five-rouble note featured a pilot next to a fighter aircraft. Ivan Dubasov, the author of this design, was inspired by photographs of real people, but their exact names could not be established. Almost all Soviet banknotes were designed by Dubasov.

Interestingly enough, in terms of colour choice, the 1938 Soviet banknotes strictly followed the standard adopted back in the tsarist times: one-rouble banknotes were sand-coloured, three-rouble banknotes were green, and five-rouble banknotes were blue. This colour pattern survived throughout the history of the Soviet Union.

In 1943, there was a plan to develop new visual standards for the Soviet money (both the rouble and chervonets) with a special emphasis on military and patriotic themes and featuring military commanders of the past ─ from Alexander Nevsky to Mikhail Kutuzov, but in the end a decision was made to wait for the right moment.

The Soviet history marks four monetary reforms which took place in 1947, 1961, 1991 and 1992. And in one way or another every time they resulted in confiscations of savings made by the Soviet people.

In 1947, banknotes with vertical orientation appeared for the first time in one-, three- and five-rouble denominations. The next ‘vertical’ banknote was the one-hundred rouble banknote issued to celebrate the Winter Olympics in Sochi in 2014. 

Money in the Russian Federation

The visual standards of banknotes changed a few times in the Post-Soviet Russia. Now we are using banknotes which follow the 1997 model developed after the currency denomination, with two additional banknotes (200 and 2,000 roubles) introduced in 2017. We also have a number of one-hundred rouble banknotes dedicated to various important events, which can be used as actual money but are virtually out of circulation since all of them ended up in notaphilist collections.

For the first time, plastic was partially used to produce a banknote issued on the occasion of the 2018 World Cup. There are rumours that the Bank of Russia plans to issue money entirely made of plastic.

The first plastic card

The first plastic card in the Soviet Union was issued back in 1986 for the Head of State Mikhail Gorbachev and a chosen few among the top party leadership. The first ATM appeared in 1990. Plastic bank cards in Russia started to turn into a noteworthy sector on the financial market only 20 years ago, in the early 2000s, and for 10 out of these 20 years, the processing company VEPAY has been helping businesses and individuals with their electronic financial transactions.

Первая пластиковая карта в СССР

Electronic money

The status of cryptocurrency in Russia is quite controversial. Officially, the Bank of Russia and the Ministry of Finance consider it as a monetary surrogate banned from circulation in Russia. On the other hand, from time to time the regulator announces its plans to start making its own cryptocurrency, even though the Russian Law on Digital Financial Assets does not even mention this category.

At the same time, all Russian citizens have access to legal electronic money, and electronic payments are becoming an essential part of most basic financial routines.

Transactions can be completed via e-wallets, payment systems, and even mobile devices.

It seems that Russian rouble which used to be a virtual currency up until the second half of the 17th century (remember, we mentioned that it was a measurement unit but had no physical medium?) is spiralling up to a new round of evolution and at the same time backsliding to its immaterial form at a totally different technological level.

Electronic and online payments

The electronic payments market continues to evolve at an explosive pace. According to the Bank of Russia, the share of payments made by card in January─March 2020 went up to 86 percent from 78 percent in 2019, while cash withdrawals from bank cards stand at only 28 percent vs 31 percent a year ago.

In total, electronic payments in the first quarter of 2020 accounted for 7 trillion roubles, which shows a 9.7-percent growth as compared to 2019.

This means that Russia is turning into a country with one of the most developed payment systems in the world. And today, while we celebrate the Russia Day, we would like to use this opportunity and wish financial success to you and financial health to your business. And the VEPAY team will be happy to take care of the technical side of your business on beneficial terms.

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