1. Ussr banking within the period of 1917-1932

The nationalization of banks began when Lenin took control of the RSFSR economy. The economic system was centrally-planned. By this definition it is meant that all economic decisions were undertaken by the government authorities. In reality, for example, the Communist Party (the governing party) of the RSFSR restricted any private type of commerce and established a fully-state owned industry where the production of all goods for mass consumption was strictly controlled. The same procedure had to be applied to banking activities (Garvy G., 1977). That is: a government managed, monitored and regulated all monetary transactions. With a help of complete control, there was no room for hidden financial transactions and any capital outflows became transparent. There was a simple logic behind this policy: the state representatives could receive a monetary tool that helped to accumulate a huge capital. Those monetary assets were subsequently used in government’s project financing. The unification of RSFSR banks appeared to be the most appropriate strategy for the establishment of a single state-governed bank. The other State-owned banks, like the Farmers bank and the Agricultural bank, were liquidated and the only one got a power of three: the Gosbank (the full Russian name is Gosudarstvenny bank). As a result of that, a private banking branch stopped existing (Kuschpeta O., 1978).

In the very beginning of the Gosbank’s governing, all efforts were directed at the development of credit mechanism. The bank itself disseminated only short-term credit and continued operating with the power of a banking monopoly (a type of the banking that was solely responsible for the money issuance). In addition to this, the Gosbank had a full and exclusive right to trade gold, silver and foreign currencies. It was the head institution that was in charge of payments and clearing systems. However, the banking system of the RSFSR was not fully adopted for the pursuance of monetary policy. It was mainly aimed at managing and developing the planned economy of the country. Nevertheless, by the end of 1920’s, the first reorganizational steps stimulated very advantageous circumstances for further developments in banking (Zaharov V., 2007).

Within the New Economic Policy period, there were some banking sectors which still continued to perform separate (other than Gosbank’s) banking activities and formed a unified network of banks, which was certainly managed and monitored by the Gosbank’s head management. This simple banking network consisted of:

• The Prombank - bank for commerce, industry and electricity. Its major activities were to issue short-term credit and 80% of its credit was going to an industrial sector.

• The Agricultural bank (Selkhov bank) -with the help of this credit institution the central bank could become the managing centre of the agricultural credit system.

• The Communal credit banks (Tsjekom bank) - the only institution responsible for the long-term credit operations. (during the period of 1920-1925)

• The Vneshtorg bank - the only bank dedicated to foreign trade, and was also dealing with export and import industries.

• The Urban loan institutions (Lombard) - institutions to be mainly tied to the working class for meeting their individual demands.

• And a few banks operating abroad (1925): Acros bank (located in London), The Guarantee- and Credit Bank for the East (Berlin), Visotski bank (Paris), Russian-Iran bank (Teheran)

(Kuschpeta O., 1978)