Foreign-Exchange Legislation

Foreign-Exchange Legislation

 

the aggregate of normative rules that determine the system for carrying out transactions (business dealings) with foreign-exchange valuables within the country and in mutual relations between the organizations and citizens of one country and the organizations and citizens of other countries, as well as the system for bringing foreign-exchange valuables in and out of the country and transferring and sending them abroad.

Legislation of the USSR has established a state foreign-exchange monopoly in order to concentrate all valuta resources with the state (in the person of the authorized banks—the Gosbank [State Bank] of the USSR and the Foreign Trade Bank of the USSR) in order to use these resources most rationally and to protect the currency interests of the USSR. On the basis of the decrees of the Central Executive Committee and the Sovnarkom (Council of People’s Commissars) of the USSR of Jan. 7, 1937, as well as a number of other normative acts, these banks were given the exclusive right to carry out transactions with foreign-exchange valuables. At the same time, other institutions, organizations, and persons were forbidden to make such transactions, with the exceptions established by corresponding normative acts (for example, state enterprises of the gold and platinum industry were authorized to purchase precious metals).

Legislation of the USSR includes as foreign-exchange valuables foreign cash; payment documents written in foreign currency (checks, promissory notes, drafts, letters of credit, and so on); foreign capital valuables (stocks and bonds); precious metals (gold, silver, platinum, and metals of the platinum group) in coins, ingots, scrap, and in crude form; articles made of precious metals; and pearls and precious stones and articles made of them. USSR currency (Gosbank notes, state treasury notes, and coins), bonds of Soviet loans, and payment documents written in rubles are included in the category of foreign-exchange valuables because they act as international payment capital or are the object of carrying, receiving, transferring, and sending over the border in both directions.

According to Soviet foreign-exchange legislation, foreign currency cannot circulate in the USSR. Payments in foreign currency on USSR territory are authorized only for foreign trade transactions and in certain established cases (for example, paying for goods at specialized stores opened for the all-Union Foreign Parcel Trade Association [Vne-shposyltorg]). All foreign currency received by Soviet organizations from foreign trade and other transactions is sold to Gosbank or the Foreign Trade Bank and paid for by them in rubles at the existing rate of exchange. At the same time, freely carrying, transferring, and sending foreign currency and other currency valuables to the USSR from abroad is permitted. In this case the currency brought from abroad or entering in favor of Soviet and foreign citizens or accredited representatives of foreign states in the USSR can be sold by them only to the above-mentioned banks or deposited in their currency account in these banks. Valuta is transferred from the USSR to foreign countries for foreign trade and other transactions by Soviet institutions and organizations without restriction within the limits of the sums established by the state monetary plan. Transfer to foreign countries on behalf of Soviet citizens and foreign physical and legal persons can usually only be done with the authorization of the Ministry of Finance of the USSR. In the cases established by foreign-currency legislation, foreign currency and payment documents and capital valuables written in such currency can be transferred, carried, and sent abroad without restriction (for example, carrying currency valuables abroad that were brought into the USSR earlier by the same person and registered by USSR customs agencies or the carrying out of cash, checks, and other payment documents purchased in USSR banks by persons going abroad on official and personal business).

Carrying or sending USSR currency abroad or bringing or sending it in from abroad is ordinarily prohibited, and therefore Soviet cash money (bills) cannot circulate outside the USSR. In this connection the foreign-exchange legislation establishes one exception: USSR citizens traveling abroad temporarily are permitted to carry out Soviet currency within certain limits on the condition that they bring it back. In the socialist countries this currency can be exchanged for the local currency in established amounts. Citizens of the socialist countries can bring into the USSR Soviet currency sold to them by the bank of the corresponding socialist country within the limits provided for by USSR foreign-exchange legislation and Gosbank agreements with the banks of those countries.

Carrying and sending currency valuables across the USSR state border is controlled by special norms.

Speculation in currency valuables and violation of the rules on the conduct of currency transactions are punishable by law.

The foreign-exchange legislation in other socialist countries has also established a valuta monopoly. In these countries currency exchange control is usually carried out by the ministries of finance, by the central banks, and, in some countries (Bulgaria, the German Democratic Republic, Poland, Rumania, and Czechoslovakia), by specialized (foreign trade) banks. These banks carry on various currency transactions for both foreign trade and for payments of a nontrade character (purchase and sale of cash; payment of checks, letters of credit, and others). According to the foreign-exchange legislation of most socialist countries, foreign currency coming from abroad is subject to being turned over to the authorized bank and paid for by them at the existing rate of exchange.

In the capitalist countries, currency exchange control generally comes down to taking steps to restrict transactions with currency valuables.

REFERENCES

Smirnov, A. M. Mezhdunarodnye valiutnye i kreditnye otnosheniia SSSR, 2nd ed. Moscow, 1960.
Frei, L. I. Mezhdunarodnye raschety i finansirovanie vneshnei torgovli sotsialisticheskikh stran, 2nd ed. Moscow, 1965.
Valiutnye otnosheniia vo vneshnei torgovle SSSR: Pravovye voprosy. Moscow, 1968.

A. B. AL’TSHULER

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