Author`s name Dmitry Sudakov

Fortune never smiles upon Ukrainian currency

The Ukrainian hryvnia is going through some tribulations. Disturbances come from European countries that continue desperate and unequal struggle with the global economic crisis. Late last year the community of experts pondered the fate of the currency of Ukraine. After all, it cannot help but to be affected by the financial tragedy of the neighboring states.

The thought of a worst case scenario - the devaluation of the hryvnia - is caused by price cuts on the export of the metal industry, the rapid growth of public debt and the need to purchase natural gas abroad. These problems are so obvious that the Ukrainians, feeling the unsteady position of the currency of the country, rushed to exchange their colored paper for the seemingly more robust U.S. currency. The authorities' response to the actions of citizens of Ukraine has caused a sense of deja vu.

The Ukrainians seemed to have returned to the Soviet past, when the purchase of foreign currency was equivalent to a crime and had to be done under cover of the night and under the veil of mystery. That is, under the counter. More recently, purchasing of the US dollars in the Ukraine has been possible only upon presentation of a passport or its copy. The details of the person who bought or sold overseas currency are transferred to the Tax Service of Ukraine.

This measure outraged the residents of Ukraine, where not every citizen is paid the so-called "white salary". Moreover, according to statistics, the majority of citizens of Ukraine work in semi-legal firms, and often without formal employment. At risk are those Ukrainians who are paid in U.S. dollars. They have to make only one step to commit a crime - a step across the threshold of a currency exchange office.

On February 25, Ukrainian President Viktor Yanukovych admitted in a live TV broadcast that he was "disingenuous" to the people talking about a problem-free state. The President clearly hinted that the raging economic crisis cannot but hurt Ukraine and doom may overtake the hryvnia, despite desperate attempts by the government to save its life at any cost. Yanukovych throws up his hands as the people have lost faith in the government and as a consequence, lost faith in the state currency. But it used to be very different.

The introduction of a new national currency - the Ukrainian hryvnia - was associated with the unconditional trust of the population in politics. The Ukrainian government built the trust of citizens in the new currency on this basis. The currency reform was carried out by the President in 1996. President Leonid Kuchma signed a decree on the day marking the fifth anniversary of the Independent Ukraine. Ukrainian hryvnia was introduced by the state instead of the ruble. It was done safely and as painless for the population as possible. A civilized monetary reform was carried out and the integrity of the existing pre-reform monetary savings was ensured. In short, the Ukrainian authorities did everything to make the people trust the new currency and perceive it as something familiar and unifying all the inhabitants of an independent country.

It is not ruled out that the positive attitude of Ukrainians to the hryvnia was affected not only by the public plan. Ukrainians had hard time pushing these bank notes away as something alien and unknown, because their history is closely intertwined with the history of the roots of Russia, the history of their ancestors. Hryvnia existed before the advent of the ruble, thus, the government of independent Ukraine, so to speak, released the national currency hryvnia from the yoke it existed in the 14th century.

Interestingly, the name "hryvnia" is translated as "the back of the head". In ancient Russia and other Slavic countries there was a custom to wear a "hryven", an ornament made of two gold plates, around the neck. This ornament was used as money, and was a sign of distinction. "Hryvnia" in Russia was given to brave warriors who had distinguished themselves in combat with the enemy. Over time, in the Kievan Rus, the hryvnia was widely used as a means of payment. "Hryvnia" became the name of a certain quantity of precious metal. There were silver coins of various weights. Kiev hryvnia silver coin had a hexagonal shape, weighed 140-160 grams and was in circulation in Russia since the 11th century, until the moment when Russia got under the yoke of the Mongol-Tatar invasion.

However, the value of the hryvnia has grown rapidly. In everyday life "Novgorod hryvnia" was used that weighed about 205 grams, and consisted of 48 spools. Two hryvnias were equated to the Russian pound. According to the chronicles, the holders of such hryvnia were noble men. One Novgorod hryvnia could be exchanged for a boat (canoe), and only for three hryvnias merchants were happy to sell their overseas boats. At that time, the hryvnia was the only valued currency, along with which there were "primitive" means of payment such as shells, animal skins, and small household items. Therefore, the appearance of the ruble was a hit below the belt for the hryvnia that not only lost its absolute power, but disappeared completely from the circulation.

The return of the hryvnia to the exchange market was very timid. The hryvnia revived against the backdrop of died down revolutionary shots, birth of Ukrainian National Republic, and ongoing unrest among the citizens. The first bill was printed on January 1, 1918. It displayed Ukrainian patterns, a woman in traditional dress, holding a sheaf of grain, and a male worker. Artist Gregory Narbut who invented the new face of the currency put into his work the characteristic symbol of that time - the unity of the workers and peasants in the construction of the new state. But despite the deep meaning inherent in the new bill, its value was small, and its life did not last long.

78 years later, in 1996, the hryvnia was destined to be reborn again. For 15 days it existed side by side with the Ukrainian ruble, which finally left the country on September 16, 1996. The emergence of a unified national Ukrainian currency was welcomed by foreign countries. The hryvnia symbolized stability of the Ukrainian economy. Since then 16 years have passed, and the position of the ancient currency once again leaves much to be desired. Was hryvnia resurrected at the wrong time? 

Maria Snytkova

Bigness

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