7. Short summary

There are several conclusive statements which could be made about the banking system of the USSR. Within a centrally-planned economy, the Gosbank developed a unified system of banks which implemented a dominating control over the country. Every financial institution served a State’s purpose to govern, monitor and manage country’s financial assets and the flow of funds. The notion of capital and money markets - the concepts attributable for Western economies, cannot be applied to the description of the Soviet credit system. There were two types of credit available in the USSR: the long-term and short—term credits - both supplied by the government. A private banking system was strictly prohibited and commercial banking had lost its autonomous existence. Any financing could be achieved only by the State’s permission and was subsequently controlled. Although, the USSR performed some financing actions outside its country, its major focus was on the development of the domestic industries and markets. There were some banks located in Europe and England. Nevertheless, the major purpose was to monitor the markets of the global economy, so that the domestic economy (including domestic production and currency) were protected. The Soviet economy had never relied on its exports (a data provides only 4,01 % revenues out of its national GDP), therefore the economy of the Soviet Union was insignificantly affected by the foreign markets.

3. Transition stage

The transition Stage in a Russian economy had brought a variety of completely new changes. Unluckily, a set of new economic reforms that was not positively met across public groups. The history of the Russian Federation began with the collapse of the Soviet Union and a former existent country got separated into the new independent republics. The new Russian economy had been left in a very fragile economic position: the centrally- planned system received its end and the new avenue of an economic development didn’t look much promising. Although, in the late 80’s, the USSR government tried to reorganize its markets and economy in order to protect the country against the diminishing growth rates. For that reason, it was established that a larger percentage of firms and organizations would receive their autonomy, and a greater number of economic entities would be released from the state’s control. In fact, the Perestroika process was actually working at an early stage, however, neither new state policies, nor new adjustments to a centrally-planned system could rescue the economy of the USSR (Kirsanov R.G., 2011). Moreover, the Western world performed much greater improvement in its capitalism development. For example, in the United States, the market economy was eventually released from the heavy government regulations and the developments in the IT industry further supported the country’s growth (Gilpin R., 2000). In comparison with that, the Russian economy was simply devastating. The Russian government clearly understood that something had to be entirely changed in order to stop the economic destruction.

There are several compelling facts that must be mentioned for the deeper understanding of the “Transformation process”. The inefficiency of the Russian financial markets was one of the greatest stumbling blocks. It goes without saying that the budget deficit, bankruptcy, inflation and the political chaos had been also weakening the situation, though, the largest problem appeared when the majority of enterprises were privatized. Secondly, before the beginning of 90’s, the whole economic USSR system relied on the centralized government’s decisions and the Central Bank regulated all prices (US Government Printing Office, 1994). The national capital used to be in hands of the government and was mainly utilized to serve the purpose of the State’s project financing. In the market economy many aspects turned to be different. The process of a price liberalisation disseminated a huge economic disorder and it was particularly impossible to establish part-time control over the country with a huge territory and 11 time zones. Finally, it was nerly impossible to implement and apply a set of radical reforms, as it had been always made during the USSR times, instead, the new economic system required a very gradual and consecutive development (Rautava J., 1996).