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Wikipedia.org
Overall, the banking system was highly centralized and fully
controlled by a single state-owned Gosbank,
responsive to the fulfillment of the government's economic plans. Soviet banks furnished
short-term credit to state-owned enterprises (at economy of the Soviet Union).
http://en.wikipedia.org/wiki/Gosbank:
Gosbank (Russian:
Госбанк,
Государственный банк
СССР, Gosudarstvenny bank SSSR—the
USSR State Bank) was the central bank of the Soviet
Union and the only bank whatsoever in the entire Union from the 1930s until
the year 1987.
The foundation of the bank was part of the implementation of the New Economic Policy. On 3 October 1921, the
All-Russian Central Executive Committee (VTsIK), passed a
resolution for the founding of the State bank of the Russian Soviet Federative
Socialist Republic. This was followed by a similar resolution passed by Sovnarkom on
10 October 1921. It began operations on 16 November 1921. In 1923 it was
transformed into the State Bank of the USSR. It was placed under the
jurisdiction of Narkomfin.[1] {Note,
both are of Jewish heritage, and both were killed during the purge of the party
under Stalin in 1938.}
http://en.wikipedia.org/wiki/Narkomfin
Narkomfin is the Ministry of Finance of the Russian Soviet Federative
Socialist Republic, known prior to 1946 as the “People’s Commissariat for
Finance” Nikolai Krestinskywas the first Commissar, appointed in 1918. However following
the introduction of the New Economic Policy Narkomfin was
made responsible for Gosbank[1], the State Bank of the RSFSR and then theSoviet Union. On 26 November
1921, Lenin issued a note
calling for the appointment of Grigory Sokolnikov, who took control of the organisation in 1922, although his
formal position was not ratified until December 1922[2]
The Soviet state used Gosbank, primarily, as a tool to impose centralized
control upon industry in general, using bank balances and transaction histories
to monitor the activity of individual concerns and their compliance with Five-Year
Plans and directives. Gosbank did not act as a commercial
bank in regard to the profit motive. It acted, theoretically, as
an instrument of government policy. Instead of independently and impartially
assessing the creditworthiness of the borrower, Gosbank would
provide loan funds to favored individuals, groups and industries as directed by
the central government.[2]
As the Union neared economic collapse, and also as part of Mikhail
Gorbachev's perestroika program, other banks were formed, including;
"Promstroybank" (USSR Bank of Industrial Construction),
"Zhilstoybank"(USSR Bank of Residential Construction),
"Agrobank" (USSR Agricultural Bank), "Vneshekonombank"
(USSR Foreign Trade Bank), and "Sberbank"
(USSR Savings Bank). "Sberbank" continues to this day as one of Russia's largest
banks, retaining senior ex-Gosbank personnel and most of the present Russian
government's banking business.
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http://www.cbr.ru/eng/today/history/gosbank.asp
Bank of
Russia's official website http://www.cbr.ru/eng/
When the New Economic Policy (NEP) was launched, the All-Russian Central
Executive Committee (VTsIK) and the Council of People’s Commissars (SNK), on
October 3 and 10, 1921, respectively, passed resolutions re-establishing the
bank under the name of the State Bank of the RSFSR. On November 16, 1921, it
began to conduct operations and in 1923 it was transformed into the State Bank
of the USSR.
The Statute of the State Bank of the RSFSR, passed by
VTsIK on October 13, 1921, said that it was an economic organisation
established "to assist by credit and other banking operations the
development of industry, agriculture and goods turnover and also the
concentration of monetary turnovers and the implementation of other measures
designed to establish proper money circulation". The bank had the right to
extend loans to industrial and commercial enterprises based on different forms
of ownership, farms and self-employed handicraftsmen "only if they were
solvent and their financing was economically justified". The State Bank
was a part of the People’s Commissariat of Finance (Narkomfin), directly
accountable to the People’s Commissar (Minister) of Finance.
In November 1921 the State Bank was
granted the exclusive right to conduct operations with foreign currency and
valuables. It also set the official price of precious metals and the official
exchange rate, regulating private trade in gold, silver and foreign currency on
stock exchanges and cheques and bills of exchange drawn in foreign currency, which
were permitted in 1922.
Two
re-denominations conducted in 1922 and 1923 increased the face value of Soviet
paper money which Narkomfin issued at that time to cover the budget deficit.
During the first re-denomination the new ruble of the 1922 issue exchanged for
10,000 rubles of all issues that were in circulation in the country; during the
second re-denomination the new ruble of the 1923 issue exchanged for 100 rubles
of the 1922 issue.
On October 11, 1922, the State Bank was
granted the right to issue the chervonets (banknote) and became the issuing
centre. The issue of the chervonets marked the beginning of the monetary reform
that ended spiralling post-war inflation.
In 1922-1924 both
the ruble and the chervonets were in circulation. The chervonets was backed by
gold: it was equivalent to 7.74232 grams of fine gold, equalling the tsarist
Russia’s 10-ruble coin. In 1923 Russia began to mint gold chervonets coins,
which were mostly used in foreign trade. In March 1924 the monetary reform was
completed and the new ruble, which was used as change and equalled one-tenth of
the chervonets, exchanged for 50,000 rubles of the 1923 issue or 50 million
rubles of the earlier issues.
During the period
of the new economic policy (NEP) the following types of bank credits were used:
the discounting of bills of exchange, demand loans from special current
accounts covered by bills of exchange and time loans against bills of exchange.
In addition, three years after its founding, the bank began to practise direct
target crediting. In October 1924 the State Bank drew up its first consolidated
credit plan comprising all branches. As a result of the reform of the cash
structure of the State Treasury, conducted in 1925, the cash holdings of the
State Bank and Narkomfin were merged.
Soviet Russia’s
first commercial banks, including sectoral joint-stock banks (specialised
banks) and mutual loan societies, appeared in 1922. These banks were to extend
short- or long-term loans to individual sectors of the economy. In 1924 the
Committee on Banks was set up under the State Bank’s Board to co-ordinate their
activities.
In the latter
half of the 1920s the functions and activities of the State Bank changed
dramatically. The change was mainly the result of the accelerated rates of
industrialisation, which required vast capital investment in the basic
industries within a short period of time.
It was impossible to industrialise
the USSR by traditional
methods, that is, by accumulating financial resources inside the country and
using foreign loans. The population lacked the required savings, while foreign
loans could not be obtained for economic (the world was in the grip of an
economic crisis) and political reasons. As a result industrialisation in the
USSR was financed by money emission. Throughout the entire period of
phasing out the NEP the Soviet authorities tried to find the simplest means by
which the state could distribute funds between the various sectors of the
economy.
In June 1927 as a result of tighter regulation of the short-term
capital movement the State Bank was vested with the responsibility of
exercising immediate day-to-day control over the entire credit system, while
the Narkomfin retained its function of general regulation. The State Bank was
to supervise the activities of other credit institutions in compliance with
government credit policy directives. Specialised banks were required to keep
their spare funds in and borrow from the State Bank only and the latter was
granted the right to be represented in their boards and auditing units. In
addition, the State Bank increased its share of the specialised banks’ equity
capital.
As the banking system was re-organised in February 1928,
most short-term credit operations began to be concentrated in the State Bank.
It also took control of many branches of joint-stock banks, which began to play
an auxiliary role in crediting the economy. Long-term lending was conducted
mainly by the Bank for the Long-Term Crediting of Industry and Power
Engineering (BDK) specially created for this purpose, the Central Utilities and
Housing Bank (Tsekombank) and partly the Central Agricultural Bank (TsSKhbank).
In August 1928 the Central Bank was assigned the task of
cash budgeting and that made it possible to concentrate all the cash operations
of the socialist economy in the State Bank.
In June 1929 the first Statute of the State Bank was
adopted, which declared the State Bank an authority regulating money
circulation and short-term lending in accordance with the general economic
development plan of the USSR.
In the late 1920s and early 1930s the USSR carried out a
series of reforms aimed at creating an effective mechanism of centrally planned
regulation of the material and financial aspects of the reproduction process.
Accordingly, a credit reform was carried through in 1930-1932, which resulted
in the creation of a mechanism of centrally planned regulation of the monetary
and credit resource flows.
In January 1930 as a result of the abolition of mutual
commercial credit all direct short-term lending began to be conducted in the
State Bank. All specialised banks turned into long-term investment banks and
all their branches were closed. Specialised banks were required to conduct all
operations through State Bank branches.
In January 1931 the acceptance form of non-cash
settlements through the State Bank was introduced.
In March 1931 the State Bank’s functions as the only
short-term credit bank and settlement and cash centre of the Soviet economy
were established.
In June 1931 working capital of enterprises was divided
into their own capital and borrowed capital, and the main principles of
short-term bank crediting were laid down. When enterprises became owners of
working capital, it became possible to establish the entities of bank
crediting. State enterprises now received short-term loans only to finance en
route values, advance payments for seasonal production reserves, the accumulation
of seasonal reserves of raw materials, fuel, production and auxiliary
materials, temporary increases in investment in unfinished construction
projects, seasonal accumulation of finished goods and products and other
temporary needs related to the production and circulation of commodities.
In May 1932 the functions of the State Bank and those of
the long-term investment banks (Prombank, Selkhozbank, Vsekobank and
Tsekombank) were finally delineated.
As a result of the credit reform the State Bank lost the
last elements of a commercial bank and became a typical Soviet state bank whose
main functions were to extend planned loans to the economy, manage money
circulation and settlements, do the cash budgeting and effect international
settlements. The structure of the credit system that was established at that
time would remain in place for 55 years practically unchanged.
Later on all changes in the activities of the State Bank
were limited to the introduction of new forms of planned credit to the economy
and bank settlements and also new methods of controlling the spending of funds
on wages and salaries (80% of the entire cash turnover) and the collection of
proceeds from trade.
In February 1930 all transactions
to sell gold and foreign currency to private individuals for chervonets at a
fixed rate were banned, the Soviet currency was withdrawn from foreign
exchanges and a quoting commission was set up under the State Bank’s Board to
set the exchange rates of foreign currencies.
In 1933 the State Bank implemented a series of measures
to accelerate settlements, improve accounting, reporting and paperwork and
enhance internal banking control. The State Bank balance sheet was restructured
on a departmental basis to become comparable with the credit plan. The
offsetting of interaffiliate turnovers was decentralised, while the centre
continued to exercise general control.
In 1939 the State Bank began to collect cash.
During the Second World War (1941-1945) it issued cash to
cover the budget deficit, increasing the money supply fourfold. To normalise money circulation a confiscatory
monetary reform
was conducted in 1947, during which old money was exchanged for new at the rate
of 10 to 1, cash accounts in the savings banks were re-evaluated and all state
loans, except the 1947 loan, were converted.
In March 1950 the gold content of the ruble was set
at 0.222168 grams of fine gold.
In December 1949 the second Statute of the State Bank was adopted.
In April 1959 an overhaul of 1959 the credit system
resulted in the transfer of some operations conducted by the Selkhozbank,
Tsekombank and municipal banks to the State Bank.
In 1960 the State Bank began to draw up plans to credit long-term
investment.
In May 1961 the ruble was
re-denominated and devalued. One new ruble exchanged for 10 old rubles.
At the same time the gold content of the ruble was only increased four times to
equal 0.987412 grams of fine gold.
In October 1960 the State Bank adopted its third Statute and in 1963 all the
state savings banks were brought under its control.
In 1965-1969 the economic reform brought about some
changes in the activities of the State Bank, which were connected with lending
and settlements, money circulation planning and regulation, financing capital
investments and organising the savings system. Credits on material assets
turnover and wage costs and credits on ordinary loan accounts became the main
means of crediting industry.
In July 1987 as a result of the reorganisation of the
credit system new specialised banks were founded (Vneshekonombank SSSR,
Promstroibank SSSR, Zhilsotsbank SSSR and Sberbank SSSR) and the State Bank
began to perform the functions of the country’s main bank. It was assigned the
task of elaborating the consolidated credit plan and planning the distribution
of funds and credit investments among all banks.
In September 1988 the fourth Statute of the State Bank of
the USSR was approved, declaring the State Bank the country’s main bank and the
only issuing centre and organiser of credit and settlement relations in the
economy.
In March 1989 the transfer of the specialised banks to
full cost-accounting and self-financing required the State Bank to provide them
with target figures on the volume of credit resources, the amount of household
savings taken on deposit, and the volume of foreign-currency receipts and
payments on banking operations.
In January 1990 the State Bank was given control over the Savings Bank of
the USSR.
On July 13, 1990, the State Bank of the RSFSR,
accountable to the Supreme Soviet of the RSFSR, was created on the basis of the
Russian Republic Bank of the State Bank of the USSR.
On December 2, 1990, the Supreme Soviet of the RSFSR
passed the Law on the Central Bank of the RSFSR (Bank of Russia), which
stipulated that the Bank of Russia was a legal entity and the main bank of the
RSFSR and that it was accountable to the Supreme Soviet of the RSFSR. The law
specified the functions of the bank in organising money circulation, monetary
regulation, economic activity and the regulation of joint-stock and
co-operative banks.
In December 1990 the Law on the State Bank of the USSR
and the Law on Banks and Banking were passed. Under these laws the State Bank
of the USSR and the national banks that were being established at that time on
the basis of the republic divisions of the State Bank were to build a single
system of central banks based on a single monetary unit, the ruble, and
fulfilling the functions of a reserve system.
In June 1991 the Statute of the Central Bank of the RSFSR
(Bank of Russia), accountable to the Supreme Soviet of the RSFSR, was approved.
The period between July 1990 and December 1991 was a time
of conflict between the Russian State Bank and the State Bank of the USSR.
In November 1991, owing to the establishment of the
Commonwealth of Independent States and the disbandment of Soviet Union
structures, the Supreme Soviet of the RSFSR proclaimed the Central Bank of the
RSFSR the only body of monetary and foreign exchange regulation in the RSFSR.
It was entrusted with the functions of the State Bank of the USSR in issuing
money and setting the exchange rate of the ruble. The Central Bank of the RSFSR
was instructed to assume, before January 1, 1992, full control of the assets,
technical facilities and other resources of the State Bank of the USSR and all
its institutions, enterprises and organisations.
On December 20, 1991, the State Bank of the USSR was
dissolved and all its assets, liabilities and property in the RSFSR were
transferred to the Central Bank of the RSFSR (Bank of Russia).
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More from Wikipedia, various sites
Assets of the largest 1,000
banks in the world grew by 6.8% in the 2008/2009 financial year to a record
$96.4 trillion while profits declined by 85% to $115bn. Growth in
assets in adverse market conditions
was largely a result of recapitalization. EU
banks held the largest share of the total, 56% in 2008/2009, down from 61% in the previous
year. Asian banks' share increased from 12% to 14% during the year, while the
share of US banks increased from 11% to 13%. Fee revenue generated by global investment
banking totaled $66.3bn in 2009, up 12% on the previous year.[10] …. Unlike most other
regulated industries, the regulator is typically also a participant in the
market, being either a publicly or privately governed central
bank. Central banks also typically have a monopoly on the business of
issuing banknotes. {In other words, they are self-regulated,
viz. that they regulate themselves for the sake of promoting their special
interests. Thus they are not function
for the sake of the nation or its people.
And since they regulate the currency, they are above government. As Napoleon said, “The hand that gives is
above the hand that takes.” } http://en.wikipedia.org/wiki/Banking
PDF link to the largest banks graph as of 2009
http://image.guardian.co.uk/sys-files/Guardian/documents/2009/03/24/BIGGEST_BANKS2.pdf
ranked by Banker’s Magazine in 2009.
The graph substantiates that US banks are only 13% while EU are
56%.
Lenin came from a diverse
ancestry. He was of Christian Russian, Tatar, German, and Swedish descent, while
his maternal grandfather may have
descended from the Jewish Blank family.[4] Lenin is also believed to have had Kalmyk ancestry on his father's side.[5][6] {in Lenin
site}.
Overall, the banking system was highly centralized and fully
controlled by a single state-owned Gosbank,
responsive to the fulfillment of the government's economic plans. Soviet banks furnished
short-term credit to state-owned enterprises.
{in Soviet banking site}.
