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¹ 0 September 2004
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The Gold Chervonets
New makes are prohibited
 How are the subjects for monetary issues chosen?
Is it worth decorating coins with diamonds?
The head of the sector of memorial coins of Department of emission-cash operations of the Bank of Russia Vasiliy Gerasimov answers the questions of the magazine "Watermark".
A coin is a bullion, just a small one
— What principle are coins divided into investing and collection by?
— It is very relative division, not fixed in any normative acts. In general, the coins, produced in honour of some events, jubilees or as an action of humanitarian type (for example, for the subject of animal protection), are called memorial.
But the coins, called as investing, have no connections with any events. They are produced for them to participate in turnover of precious metal. For any person to be able to buy gold or silver in some amount.
— How did the first investing coins appear?
— Before World War I the gold-monetary standard had crushed, but there were many old gold and silver coins in turnover, they played the functions of real money at the period of gold-monetary standard acting. And, when in the post-war period markets of precious metal were restored (first of all- London"s market of gold), these coins appeared as small bullions there. They couldn"t come back to monetary turnover, because their pars were behind the new scale of prices.
By that moment monetary systems were built on the basis of monetary signs. And we are still using monetary signs. We don"t have real money, which are goods as Marks said.
So, in 1957 in Great Britain the decision was made to resume minting gold sovereigns, which were the basic coins of British gold-monetary standard that time. They were minted within the same technological parameters, with the same quantity of gold as before, though the metal cost of the coin and its par didn"t match each other any more. These coins went to the market at once and were called as bullion or investing.
Together with British sovereigns (they were minted till 60 tons a year) a great amount of old German coins and Russian gold 5-ruble and 10-ruble coins with the portraits of Nikolay II were in turnover of gold markets.
Since the 60-s of XX century the assortment of investing coins began completing with new issues. They were South-African coins, Australian coin with the representation of kangaroo, kookaburras, gold nuggets, Canadian coins with the representation of a maple leaf, American coins with the representation of Freedom and an eagle, Mexican ones with the representation of Nike and English ones with the representation of Britain. All of them don"t have any subject meaning. Usually a state symbol, easy to recognize, is placed on these coins: some endemic animal (kangaroo, kookaburras), or a maple leaf, or a state coat of arms.
Our gold chervonets belongs to investing coins too (with the representation of a sower, that is a symbol of reviving Russia). It was minted yet at the Soviet period: from 1975 till 1982.
— Have gold chervonets been ever minted since that?
— No, they haven"t. That time they minted about 50 tons, the most part of them was sold in the external market, but some reserve is kept by us now, and we keep providing these coins to commercial banks.
There is one more Russian investing coin. It is a silver 3-ruble "Sable", minted in 1995. A sable is considered to be a symbol of Russia. Perhaps it was not very successful: still the symbol of the country should have been worked out very hard for receiving something very recognizable. However, if there is an opportunity to repeat an issue of investing coins, we"ll have certain experience.
The gold standard is impossible to return
— The par is placed on all memorial coins. What for?
— If you take a metal circle, where the par is not pointed, it can"t be a coin. For issuing a coin (as well as a banknote), it is obligatory to give it a par. The monetary function of a coin (banknote) is realized just in par.
— But it is very relatively: for example, a kilo silver coin has a par of 100-ruble…
— The fact what way a par has an attitude towards metal cost of a coin is another point. This is a relative notion in fact. But in the circumstances of absence of the gold-monetary standard there is no other way.
— Why?
— The gold-monetary standard appeared in 1816 (that time the law about money was accepted in Great Britain) and quitted operating before World War I. In 1925-1931 Great Britain made any attempts to restore of the gold-monetary standard, even accepted a certain law, but had to cancel it because this law couldn"t work at all.
The matter is that in any monetary system, based on conversion of not monetary signs but real money (parallel circulation, bimetallism, gold-monetary standard), nominal cost of a coin is equivalent to market cost of the metal, included in it. The notion of "gold-monetary standard" itself means stability, invariability of correlation of these two cost figures- a par of a coin and cost of metal. A par of a coin (banknote) can"t change in fact, it is its nature. It means existing the standard required ensuring invariable constant price for gold. For example, if during the whole XIX century in Great Britain it was possible to buy 7,33 grams of gold for 1 pound of silver sterling (of 925 order) coins, it allowed to mint a gold coin of 7,3 grams of weight and to determine its par as 1 sovereign (it was equated to a pound of sterling, which was an accounts monetary unit that time). And since, while invariability of this price correlation was being kept, there have been gold-monetary standard.
Necessary to remark that, during the period of gold-monetary standard operating, countries supported stability of the world prices for precious metals specially.
This was a way of operating of the countries- members of Bretton- Wood currency system (1944), supporting so-called gold-motto standard (initially 1 Troy ounce was equated with 35 dollars of the USA).
Now the situation is principally another. There is no stability of the world prices for precious metals, they are formed under the influence of demand and supply. With these circumstances any standards can"t exist, because it"s impossible to connect a coin par (it is still an invariable unit) with cost of precious metals, what prices are constantly and unexpectedly changing.
It"s reflected in the principle of refusal from gold content of national currencies, put in the constituent documents of International currency fund, Russia being a member of it. In the federal law "About the Central bank of the Russian Federation (the Bank of Russia)" there is an article, prohibiting to nominate precious metals in rubles.
— What about the suggestions of some deputies of Russian State Duma to issue a gold payment coin?
— These suggestions keep appearing. We have written piles of paper out, trying to explain: dear deputies, if you ensure stable world prices for gold and silver, make any changes into article 75 of Constitution of Russia, the federal law about the Central bank, a number of different normative-legal acts, break any relationships with International currency fund, so we can try. But nowadays it"s impossible.
In general, while monetary signs are existing in monetary circulation, no silver or gold coins, even with a high par, covering cost of metal, can"t exist as real money, as payment means. And there are proofs for it.
This is an example from real life. In 1951-1974 in the Federal German Republic a 5-mark silver coin, which was not memorial even, was taken into circulation. An usual coin of 5 marks. The design is the same as of a traditional copper-nickel one. Some tons of silver were used for their minting. The par of the coin recovered the cost of silver, contained in it, greatly. It means that a person could pay for goods of 5-mark cost with this coin without any visual losses for himself. But nobody did it. All these coins were "cancelled" from circulation in no time- people didn"t use them for payment but kept in their home "cans". The matter is any German always had monetary signs in the forms of copper-nickel coins for a sum of 5marks in his pocket, and he paid with them but not a silver coin.
There is law: if in the monetary circulation two monetary signs with the equal pars are used simultaneously, but one is better and another is worse, always worse one will stay in the circulation. This objective economic law works everywhere and always.
How to appear on the coin?
— How are subjects for issuing memorable coins chosen?
— It is very simple. This is usual routine work. Let"s suppose, you"ve got an assignment: to draw up an annual plan of memorable coins issuing. What will you start with? Perhaps, firstly you will look through everything, produced the previous year, what series were issued. Then you will take calendars, find out what remarkable date are expected. You will communicate with specialists from the Historical museum, consult in Ministry of Culture. You will study the list of important dates, which is held under the aegis of UNESCO.
While your studying all these you"ve got a lot of suggestions more from different ministries, departments, republics, regions, organizations. Who has any event-everybody would like to immortalize it in a coin. You are sure to choose something, having state meaning among this flood of events. For example, the 1000th anniversary of Kazan. Or the 300th anniversary of Saint-Petersburg.
— Was there a tradition of issuing memorable coins in pre-revolutionary Russia?
— Before October revolution 13 memorable coins were produced. Mainly they were connected with the events from the life of the royal family: for example, the coin on the occasion of wedding ceremony of the crown prince. Or the coin in honour of establishing Alexander column. Russian emperor was a monetary senior, he determined what to mint, he chose subjects.
— How about Soviet period?
— The first Soviet memorable coin was produced in 1965 for the 20th anniversary of Victory. Then there were coins for the 100th anniversary of Lenin, then- series fro the jubilee of October revolution. They were copper-nickel coins.
Precious metals were used firstly in the Olympic series. In 1977 first gold, silver and platinum coins appeared, produced in honour of Moscow Olympic Games. Then there was a break till 1988 (during this period memorable coins from cupronickel were minted), and in 1988 the first series from 6 coins from precious metals was issued, devoted to the 1000th anniversary of Christianity. These coins became the base of our Historical series, being still continued.
In 1989 according to the suggestion of foreign distributors we started a series "Russian ballet". In Soviet period all memorable coins from precious metals were sold in the external market- in the USSR all operations with precious metals for average people were prohibited by law. The series "Russian ballet" was of great demand. Initially there were representatives of ballet dancers, then-the episodes from classic ballet performances: "Sleeping beauty", "Nutcracker", "The lake swan", "Raymonda"…Today there are suggestions concerning modern ballet. So, the series will go on.
And in 1990 Geographic series started: the coins, devoted to the discovery of Russian America, were issued.
Doomed for shortage
— One of the main claims of Russian numismatists is that in Russia there are very many series of memorable coins but with rather little printing. From one side, new coins are difficult to obtain, from another side huge funds are necessary to buy everything.
— Of course, there are countries, producing just several types of coins a year. For example, in Germany 3-4 coins are produced annually. But the printings are of some million each.
We have got another tradition. In average, from 25 to 50 coins are produced in Russia annually. We have, as I"ve mentioned before, some series and there are collectors, specializing in just historical or geographic series. But in fact there are such ones, who want to see all produced coins in their collections.
We try to satisfy all interests. Sometimes we succeed in reducing "the assortment". But we have to consider external circumstances too. For example, this year Petersburg is celebrating the 300th anniversary. To avoid the subject is impossible. We started to work it out and understood that, except Petersburg, there were Kronshtadt, Viborg, Shlisserburg, Petrozavodsk, and all of them formed exactly the window, cut out by Peter to Europe. Concerning all reducing we got 8 coins. For Petersburg not to be lost we decided to issue 6 more small silver ruble coins- with small symbols of the city. As the result there are 14 coins just with Petersburg subject.
As for printing, of course, demand covers supply. But it is correct. The more rare a coin is, the more expensive it costs. And its cost keeps growing. For example, the coin is produced with printing of 200 units- that"s all. Never more. It makes it more attractive.
— But if the demand is very big, is it possible to mint more?
— I"d like to stress this moment specially: there is no additional printing ever. As soon as the number has minted, all minting instrument is destroyed. We follow emission discipline very severe. No repetition of new makes is produced, whatever great the demand is.
If to set up a target to satisfy coin demand for 100%, it will be not numismatics. It will be something like the sausage "Doctorskay".
Gold is minted by tons
— How do you like appearance of foreign coins in Russian market?
— It is normal, it should be. Market is market. If there is demand for Australian coins "Kangaroo", sold by Sberbank, so there must be "Kangaroo". Our coins are also sold abroad.
— How big is the interest to Russian coins abroad?
— It is big. Russian numismatics is one of the most demanded. We"ve got rich history, including monetary history too, there are many interesting coins.
— What about modern Russian memorable coins? Are they demanded?
— Frankly speaking, our coins are praised for high level of art design. We"ve got wonderful artists. Our coins obtain international prizes regularly not by accident.
— What countries are the most active in producing coins from precious metals?
— If to speak about modern issues, very many memorable coins are produced in Great Britain, Canada, the USA, Russia, Austria. The situation with Austria is the very interesting: the country doesn"t have its own store of gold and silver, but is situated in the rank of the biggest manufacturers of gold and silver coins, including coins of investing meaning.
The statistics of usage of precious metals for coins, frankly speaking, is terrible. For example, for last 5-7 years 4-11 tons of gold a year are used in Australia, 10-29 tons- in Austria, 11-26 tons- in the USA (in 1999- even 60,3 tons of gold), in Collaboration of Independent Countries (including Russia) 0,4 thousand tons of gold are used.
— What is the reason of this break?
— Surely, the most part of gold expenses in the abovementioned countries is spent for minting investing coins. But the most important fact is that the market there has been working for tens years, moreover there is another legislation: in all civilized countries coins are not taxed. If it is legal payment means, it should be circulated in the same regime as all monetary cash. Only in some countries there is a tax on silver coins but it"s very small. As for gold coins, as a rule, there are no taxes and customs. It gives the market an opportunity to develop.
— Do Russian programs of memorable coins issuing happen to cross with foreign ones?
— In Soviet period, for example, there was production of coins, devoted to Soviet-Bulgarian friendship. We had 1ruble, in Bulgaria there was 1 leva. Their reverse was equal: two hands, two flags and the note "friendship forever". We participated in the international program, devoted the 50-th anniversary of United Nations, and produced two coins.
And another story: In 1993 due to the suggestion of French side we minted a coin, devoted to the 100th anniversary of the day of signing Russian-French agreement. This event was decided to celebrate by issuing identical coins- both in Russia and in France. We issued our coin but French producers couldn"t. They have more complicated procedure of ratifying- all decisions over memorable coin issuing in France must go through the parliament.
By the way, the same procedure, with ratifying plans of issue of memorable coins by parliament, is existing in the USA.
— Who ratifies the plans in Russia?
— This is the prerogative of Board of directors of the Bank of Russia.
Diamond excesses
— In Byelorussia a coin with diamonds is produced. Do we plan something similar?
— Frankly speaking, a coin with diamonds is nonsense. They are made by officials, who don"t understand what a coin is. What is the coin with precious stones? It is not a coin yet …
These attempts were undertaken before as well. In Poland, for example, there was a coin with amber, assembled into. Also I saw a coin, inside which a capsule with small precious stones (emerald, sapphire, ruby) was installed.
I repeat, from my point of view, they are not coins. They are toys. Perhaps someone doesn"t like it. But as for existing market for these makes…
A coin is a metal circle only.
— But coins may be not only round.
— Yes, coins may be with facets. Or with holes. But it is explained by the state traditions, where the coins are minted. For example, in China there are coins with square holes: in ancient time in China such coins were cast, holes were made inside for the coins to be able to carry on a cord.
— Is it possible to make a coin with facets in Russia?
— It is unreasonable. We didn"t have these traditions.
— Some countries produce colourful coins…
— This is one more attempt to attract attention to the production. Nowadays in the world in more than 75 countries more than 360 kinds of memorable coins are taken in circulation annually. The competition is hard. That"s why different ideas appear: colourful coins, coins with holograms.
But nevertheless, these coins occupy very small sector in numismatics market. I repeat, there are certain monetary traditions. The further manufacturers go away from the traditions, the less chances they have to fix in the market.
Natalya Ipatova
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