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. Last Updated: 07/27/2016

Despite Threats, Bank Firm Over Ruble

Parliament's leaders on Wednesday threatened to fire the chairman of Russia's Central Bank unless he canceled his unpopular decision to withdraw old rubles, but the bank stood by the decision.


Finance Minister Boris Fyodorov also called for Gerashchenko's resignation, revealing a deep split in President Boris Yeltsin's government between reformists and conservatives that has been widened by the Bank's weekend move to withdraw pre-1993 bank notes.


The calls came amid continuing confusion over who actually controls the Central Bank and money supply, and over which government officials would be held responsible for last Saturday's decision.


Vladimir Mazayev, the author of a resolution signed Wednesday by the parliament's presidium, said lawmakers had demanded that the Central Bank remove all limits on the exchange of pre-1993 rubles.


He said that the Bank, headed by Viktor Gerashchenko, "will have to comply with our decision". If it did not, "then we will be forced to remove Gerashchenko from power", Mazayev said.


President Boris Yeltsin kept his public silence over the issue Wednesday, while Prime Minister Viktor Chernomyrdin appeared increasingly isolated as he continued to back the move.


Having supported the measure last Saturday, while Yeltsin was still on vacation, Chernomyrdin said on Wednesday that although the principle behind the ruble exchange was correct, he had been given incorrect information over how the withdrawal would affect Russians.


He said that government officials had been told that there would be enough new money in circulation to enact the change, and that they had agreed to extensions after it became clear that this was not the case.


"The day it started, it turned out that there wasn't enough money, there was not enough change, 35, 000 was not the right figure, and two weeks were not enough", a visibly exasperated Chernomyrdin told Commonwealth television.


The Central Bank's first deputy chairman, Arnold Volyukov, said at a separate press conference that the Bank had calculated that the average Russian had only 8, 000 rubles in old notes, easily within the 35, 000 ruble limit.


Fyodorov, who had denounced the move immediately from the United States - where he too was vacationing - said he believed that Yeltsin had not supported the measure.


Instead he called the move "a provocation against the president, the government, and the Russian people". He said it had been planned by Gerashchenko, who misled Chernomyrdin and failed to inform the Finance Ministry.


"It is a deception", Fyodorov said at a press conference. "The most important thing is trust. Who will trust Russia after this? "


He said the move had been prepared by those with "a nostalgia for Stalinist control of the monetary system", adding that this applied to the leadership of the Bank and of parliament.


Fyodorov called on Yeltsin to lift all limitations on exchange of cash for Russian citizens so that parliament's leaders, who led an attack against the president's market reforms last week, could, not use the money crisis as a weapon against reformers.


The president received unaccustomed support from the Central Bank's first deputy chairman, Alexander Khandruyev, on Wednesday. He told journalists before the presidium's decision that it "would be exceeding its authority" by demanding that all limitations be removed from the ruble exchange program.


Khandruyev said legislators did not have the power to countermand Yeltsin's decree of Monday, in which he had softened the original terms of exchange and ordered that each citizen should have until the end of August to change up to 100, 000 old rubles.


Mazayev, who wrote parliament's demand, said Gerashchenko had told the presidium that he planned to appeal its decision in Russia's Arbitration Court.


He said the presidium was not exceeding its authority, citing an article in Russia's existing Constitution that gives the presidium the responsibility of guaranteeing the observance of the Constitution.


The fiasco that has resulted from the currency reform, which had forced angry Russians to flock to savings banks to exchange their cash, has led to all-out attacks on Yeltsin and his government.