Decentralized Payments

Decentralized Payments 

in the USSR, payments that are continuously being made in connection with mutual claims of economic organizations. They are effected by institutions of Gosbank (State Bank) in locations where the payer has his clearing accounts. Decentralized payment operations began in 1954 and are used now in many sectors of industry and transport.

Under the system of decentralized payments, mutual claims are cleared, primary payments (for material values and services) are set off from other payments for set short periods, and credit and clearing operations are more completely combined. Decentralized payments, along with the general operation of clearing of mutual claims of economic organizations (through the Bureau of Mutual Accounts), are one of the means of substituting noncash operations for cash payments. All payments for incoming commodity-material values and services rendered and for all similar payments are concentrated in the bank in special assets and liabilities accounts that are opened for the users of this system. Credits may be allocated to complete the decentralized payments and to pay off amounts not accounted for in this operation. At the end of 1970 credits amounted to 15 percent of the total of payments related to decentralized payments operations.

Decentralized payments ensure under certain conditions accelerated turnover of funds in settlement of accounts and strengthening of financial control, as well as a simple and economical means of payment and reduced credit requirements. The effectiveness of the decentralized payment system depends in many ways on the nature of the users of the system and the nature of their financial relationship: on the recurrence of the need for payments and on the stability and continuity of their clearing relations. It also depends on the possibilities of obtaining credit promptly and fully for completion of the payment and utilizing in operations the funds remaining after decentralized payments. At the beginning of 1971 decentralized payments were 13 percent of the entire payment turnover for commodities and services.

V. I. RYBIN