Financial Systems

Financial Systems

 

(1) In the broad sense, the totality of spheres (components) of financial relations through which, within the framework of a socioeconomic structure, the creation and use of monetary funds are ensured.

(2) In the narrower sense, a financial system is the system of financial institutions in a country that mobilize monetary resources, distribute the resources in the process of financing and crediting, and exercise financial control. Bank credit is sometimes considered part of the financial system in socialist countries.

The financial systems of capitalist countries include the national budget, local budgets, insurance funds, and various types of independent accounts and extrabudgetary funds and accounts, as well as the finances of state-run enterprises. The financial systems of bourgeois states are characterized by the separation of individual components, the increasing financial dependence of local bodies on the central government, and the ever-expanding use of government funds by the monopolistic bourgeoisie. In the developing countries, the reorganization of financial systems is subordinate to the task of carrying out the economic and social transformations necessary to ensure the independence of the national economy.

In socialist countries, financial systems are based on democratic centralism and Leninist national policy. Such systems offer the optimal combination of centralized planned supervision with economic independence and initiative on the enterprise level; they also make it possible to carry out countrywide financial policies. The financial systems of socialist states include the state budget; the finances of socialist enterprises, organizations, and sectors of the economy; the budget for state social insurance and state property and personal insurance; and state credit.

Under developed socialism, financial systems play a greater role in ensuring a high and stable rate of extended socialist reproduction and in increasing the overall efficiency of the economy in order to maintain a steady rise in the people’s standard of living.

R. D. VINOKUR

References in periodicals archive ?
This confirms MoF's commitment to managing and developing the government financial systems in order to facilitate the federal entities' transactions.
A new UNEP report released at the International Monetary Fund (IMF)/World Bank Annual Meetings shows how to harness the assets of the world's financial system for sustainability - the key findings are that: A 'quiet revolution' is underway as financial policymakers and regulators take steps to integrate sustainable development considerations into financial systems to make them fit for the 21st century.
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and for its worries about "the rapid growth in debt and asset prices" in a world of deregulated financial systems where inflation has been defeated.
Monitoring of the control environment includes verifying systemic controls within the financial systems and the associated actions for remediation of any control violations.
GAO was asked to identify the core financial systems used at each of the CFO Act agencies as of September 30, 2002, and the status of any agency plans to update core financial systems.
A recent survey by Cap Gemini/Ernst & Young found that 63 percent of the CFOs surveyed indicated that their financial systems are inadequate for the new reporting requirements.
These newly open markets were exposed to a huge expansion in capital inflows that their economic and financial systems were not ready to absorb.
It is clear that financial systems play a significant role in promoting economic development.
If we are to improve the ability of developing countries to withstand inevitable swings, instead of just relying solely upon spouting the macro-economic gospel, it would be prudent to strengthen the financial systems and financial institutions within those nations.
Moreover, outside of Asia, several East European countries have made significant progress toward the adoption and implementation of market systems and have increasingly integrated their financial systems into the broader world context to the evident benefit of their populations.

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