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Soviet Union Table of Contents

Soviet Union

Financial System

The ruble, consisting of 100 kopeks, is the unit of currency. In the mid-1980s, the ruble (for value of the ruble--see Glossary) was a purely internal currency unit, and the government fixed its rate of exchange with foreign currencies somewhat arbitrarily. The State Bank (Gosudarstvennyi bank--Gosbank) issued currency and established its official gold content and thus its exchange rate with foreign currencies. The real value of the ruble for purchase of domestic consumer goods in comparison with the United States dollar was very difficult to determine because the Soviet price structure, traditionally established by the State Committee on Prices, differed from that of a market economy.

The banking system was owned and managed by the government. Gosbank was the central bank of the country and also its only commercial bank. It handled all significant banking transactions, including the issuing and control of currency and credit, management of the gold reserve, and oversight of all transactions among economic enterprises. Because it held enterprise accounts, the bank could monitor their financial performance. It had main offices in each union republic (see Glossary) and many smaller branches and savings banks throughout the country. The banking system also included the Foreign Economic Activity Bank and the All-Union Capital Investment Bank. The latter bank provided capital investment funds for all branches of the economy except agriculture, which was handled by Gosbank.

Because the banking system was highly centralized, it formed an integral part of the management of the economy. The Ministry of Finance had an important role to play in the economic system, for it established financial plans to control the procurement and use of the country's financial resources. It managed the budget in accordance with the wishes of central planners. The budget had traditionally allocated most of the country's investment resources (see Tools of Control , this ch.). The reforms of the mid-1980s, however, required enterprises to rely to a greater extent on their own financial resources rather than on the central budget. These reforms also called for the creation of several new banks to finance industrial undertakings, ending the monopoly of Gosbank. Enterprises would seek and receive credit from a variety of banks.

Citizens could maintain personal savings accounts and, beginning in 1987, checking accounts. These accounts, initially limited to the Russian Republic, were offered by the newly formed Labor Savings and Consumer Credit Bank. Over the years, personal savings accounts had accumulated massive amounts of money, growing from 1.9 billion rubles in 1950 to 156.5 billion rubles in 1980. The savings represented excess purchasing power, probably the result of repressed inflation and shortages of quality consumer goods.

Data as of May 1989