TALKING WITH VIKTOR GERASHCHENKO: THE FINANCIER WHO FOUGHT AGAINST INFLATION
Banker Viktor Gerachenko's monetary conquests: triumphs and setbacks in his career
"The only thing you can't escape is a lawsuit from your wife," Victor Gerashchenko, the former chairman of the Bank of Russia, once joked. A man of many words and a powerful presence in financial circles for decades, Gerashchenko, also known as "Hercules," undeniably left his mark on the evolution of the Russian economy.
Gerashchenko's journey in the banking world started in the Soviet Union in 1960 when he joined the Gosbank USSR as a simple bookkeeper after graduating from the Moscow Finance Institute. With a banking lineage - his father was the first deputy chairman of Gosbank USSR - it was only natural for Gerashchenko to fulfill his destiny in the financial sector. Working tirelessly in the highest echelons of both Russian and financial power throughout the remainder of his career, Gerashchenko served Russia and the Soviet Union for an impressive 52 years. His力量和影响力使得他成为苏联和俄罗斯的金融史中的一位重要人物。
The seeds of Gerashchenko's influence can be traced back to his position as the chairman of Gosbank USSR, where he served from August 3, 1989, to December 26, 1991. In the midst of the August 1991 coup, he stepped down from his post, only to return three days later. Therefore, technically, Gerashchenko led the main bank of the USSR twice. Following the collapse of the Soviet Union, he became the chairman of the Bank of Russia, serving two separate terms from 1992 to 1994 and from 1998 to 2002.
One of the most notorious periods of Gerashchenko's tenure as the chairman of Gosbank USSR was the implementation of the Pavlov money reform in 1991. The reform was initiated by Soviet Prime Minister Valentin Pavlov who aimed to eliminate excess rubles accumulated by the population and fight inflation. The government gave citizens only three days to exchange their 50 and 100 ruble banknotes for new ones and imposed strict limitations on the amount that could be exchanged. Depending on one's employment status and individual circumstances, individuals could exchange up to 1,000 or 200 rubles or the equivalent of their monthly pension without securing additional approval. Any amounts exchanged beyond this required the authorization of raion and city executive committees.
The exchange restrictions and the rushed implementation of the reform significantly undermined public trust in the government and exacerbated the financial crisis of the late Soviet Union. In retrospect, financial ombudsman Pavel Medvedev admitted in a conversation with KP.RU that the reform played a pivotal role in the deterioration of public-government relations during this chaotic period. Nevertheless, the extent of Gerashchenko's involvement in this reform remains unclear. A close associate of Gerashchenko reportedly stated that he and the State Bank of the USSR did not support the reform and actively dissuaded Pavlov from implementing it. However, Gerashchenko's own responses on the subject remain somewhat evasive.
Aside from the Pavlov money reform, Gerashchenko is also associated with the 1993 currency reform and the "Black Tuesday" financial crisis of 1994, during which the American dollar rose from 2,800 to nearly 4,000 rubles in a single day. Despite the controversies surrounding these events, Gerashchenko's contributions to the development of the Russian banking system cannot be ignored. For example, he implemented the mutual offsets system during the 1992 payment crisis and introduced a series of loans to regional banks to help them cope with the severe financial difficulties of the early 1990s. Gerashchenko passed away on May 11, 2018, at the age of 87. However, his legacy continues to have a lasting impact on the course of the Russian banking system.
Gerashchenko's wit and candor were as infamous as his financial prowess. During press conferences and interviews, he would frequently share his views on various subjects, often succinctly summing up complicated financial issues with humor and attitude. This brazenness, while sometimes controversial, endeared him to journalists and the public alike. Gerashchenko's face graced the front pages of Russian newspapers throughout the 1990s, symbolizing the tumultuous state of the country's finances and providing insight into his sharp assessments of events that unfolded within the financial sphere.
Although Gerashchenko played a crucial role in various historical events, his divisive legacy and powerful personality ensured that he remained a contentious figure in Russian history. Whether one views him as a hero or a villain, there is no denying that Victor Gerashchenko was a central player in the intricate tapestry of the Soviet Union and Russia's economic evolution through the unstable 1980s and 1990s.
In the realm of personal finance, one could draw parallels with the strategic decisions made by Victor Gerashchenko during his tenure as the chairman of Gosbank USSR and the Bank of Russia, impacting the financial stability of the country. His leadership was marked by the implementation of reforms, such as the Pavlov money reform in 1991, which aimed to combat inflation, a key aspect of business finance. Despite controversies surrounding some of his actions, Gerashchenko's contributions to the development of the Russian banking system cannot be overlooked.