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.
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.
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
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
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
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
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 convented.
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
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
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.
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
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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