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Withdrawal of Ruble Sparks a Panic

January 23, 1991|From Reuters

MOSCOW — Panicked Soviets besieged savings banks from the Baltics to Siberia today and tried to sell each other wads of rubles after the government announced it was taking big bills out of circulation.

President Mikhail S. Gorbachev said in a decree Tuesday night that 50- and 100-ruble bills--worth $90 and $100 at the official rate--will be taken out of circulation within three days and that savings-account withdrawals will be severely limited.

There were early signs that the republics that form the Soviet Union might not go along, setting the stage for yet another clash with the Kremlin.

In the Baltic republics, which are seeking to regain their pre-World War II independence, bankers and officials were aghast at the new rules, particularly a clause allowing the KGB to seize banks that fail to comply.

Elmar Matt, a director of the Central Bank of Estonia, said the decree was part of the "war" between the republics and the Kremlin.

The president of the central Asian republic of Uzbekistan said he was extending Friday's deadline for exchanging bills until Feb. 1.

The giant Russian Federation took a cautious line, saying only that it would try to cushion the blow. The republic's Parliament is to meet Thursday to work out a position on the new measures.

The decree triggered a panic because it allows Soviets to change only the equivalent of a month's salary, or a maximum of 1,000 rubles ($1,785), and requires proof the money was earned legally. Soviets often keep large sums of cash at home so they can buy goods when they appear in shops.

People scurried today to unload big bills or protect the value of their savings. Lines began forming outside banks early in the morning, and police were sent to keep order.

A frenzied mob gathered outside Moscow's Ryzhsky market, trying to unload 50- and 100-ruble bills. Big bills were going for half their face value.

"I won't take that, I won't take that," a middle-aged woman trader shouted as an eager buyer tried to shove a wad of 50-ruble notes at her in exchange for a Finnish track suit.

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