State Bank, Central

State Bank, Central

 

in socialist countries the central bank of issue, the main link of the credit system. In the socialist countries a government monopoly in banking has been introduced; the state bank is controlled by the highest executive body of the state government, the council of ministers.

The state bank in all the socialist countries is a single centralized system. A considerable share of the money circulation of the state is reflected in its accounts. In this connection, the state bank under socialism represents essentially an instrument of general governmental bookkeeping, of accounting for the production and distribution of products. The state bank helps to implement the economic and political policy of the socialist state. It takes part in the planning and direction of the national economy.

The state bank under socialism is above all the bank of issue. The exclusive right of putting money into circulation granted the bank and the connected activity of organizing and regulating money circulation characterize and determine its special place in the national economy of the socialist countries. In most of the socialist countries (including Bulgaria, Czechoslovakia, Hungary, Mongolia, Poland, Rumania, and the USSR) the state bank is also the credit and accounting center. On the basis of the economic plan of the country the bank brings together all the available funds of the enterprises and organizations, the reserves of the state budget and of the credit institutions, and so on; it organizes and settles the accounts of the national economy. The forms and methods of granting credit to enterprises and organizations, as well as the forms of settling accounts in the national economy, are different in each socialist country. A special function of the state bank in the socialist countries is making payments and settlements in implementation of the state budget. The bank acts on behalf of the government and its agencies in international currency, credit, and accounting relations.

In performing these functions the state bank promotes the growth of production, commodity circulation, socialist accumulation in the economy, and the further strengthening of the national currency. In the process of granting credit, clearing accounts, and organizing and controlling the money circulation, the state bank exerts financial control on the process of production and circulation of goods, the fulfillment of the plan targets, the effective and rational use of the fixed capital stock and the working capital, the expenditure of the wage fund, and the observation of a policy of economy and of payment and contract discipline.

With the economic reforms in the socialist countries the importance of the state bank in directing the national economy has increased. The process of concentrating in the state bank the means for granting short- and long-term credit is continuing, the objectives of banking credit are being considerably broadened, the forms and methods of credit servicing of the economy are being perfected, the role of the bank in settling accounts between enterprises is becoming greater, and the economic methods of influence of the state bank in the economy are being further developed in the interest of increasing the efficiency of social production.

I. D. MAMONOVA

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