State Bank of the USSR

The State Bank of the USSR (Russian: Государственный банк СССР, romanized: Gosudarstvennyy bank SSSR), known as the State Bank of the RSFSR from 1921 to 1923, and commonly referred to as Gosbank (Russian: Госбанк), was the central bank and main component of the single-tier banking system of the Soviet Union. It replaced the State Bank of the Russian Empire, and following the dissolution of the Soviet Union, it became the Central Bank of Russia in 1992 (with Gosbank ceasing to exist).

Gosbank was one of the three main Soviet economic authorities, the other two being Gosplan (the State Planning Committee) and Gossnab (the State Committee for Material Technical Supply). It closely collaborated with the Soviet Ministry of Finance to prepare the national state budget.

The foundation of the bank was part of the implementation of the New Economic Policy (NEP), following the monetary dislocation and barter economy during the Russian Civil War. On 3 October 1921, the All-Russian Central Executive Committee passed a resolution for the founding of the State Bank of the Russian Soviet Federative Socialist Republic, followed by a similar resolution passed by the Council of People's Commissars on 10 October 1921 and a statute passed by the Central Committee on 13 October 1921 which stipulated that the State Bank was part of the Ministry of Finance (Narkomfin). It began operations on 16 November 1921. In February 1922, Vladimir Lenin derided the State Bank as "a bureaucratic paper game", comparing it to a Potemkin village in a letter to the bank’s head Aron Sheinman whom he accused of "Communist-mandarin childishness".

The State Bank presided over the two successive devaluations of the ruble, in 1922 (1 for 10,000) and 1923 (1 for 100). Meanwhile, on 11 October 1922 it was granted the right to issue the gold-backed chervonets or gold ruble that brought an end to the early Soviet hyperinflation. In 1923, it took its permanent name as State Bank of the USSR. In 1924 the State Bank produced its first consolidated credit plan, and formed the Committee on Banks to oversee the sectoral banks that had been created under the NEP. In 1925, it took over the previously separate cash holding system of Narkomfin.

The subsequent phase of Soviet central planning and phasing-out of the NEP led to the State Bank being granted a monopoly over short-term bank credit in 1927, and over all short-term credit in 1930 after mutual and direct commercial credit was terminated. In 1928-1930, the local branches of other banks were brought under the State Bank or closed, so that Prombank, Tsekombank or Selkhozbank subsequently operated largely through the State Bank's local offices. That phase of reform was completed in 1932, after which the division of labor between the State Bank and the other components of the Soviet banking system remained broadly stable until the late 1980s.

In 1931 Boris Berlatsky, a senior official of the State Bank was put on trial for wrecking as part of the 1931 Menshevik Trial.

Following aggressive monetary expansion during World War II, the monetary reform of 1947 resulted in another round of devaluation (1 for 10) and related confiscatory measures. In 1959, the consolidation of the specialized long-term credit banks into the Construction Bank of the USSR resulted in the assumption of some former operations of Selkhozbank, Tsekombank and municipal banks by the State Bank. The monetary reform of 1961 introduced another round of devaluation (1 for 10). In 1963, the State Bank's control over the system was further strengthened as it took over the State Labor Savings Banks System from the Soviet Ministry of Finance.

The Soviet state used the State Bank primarily as a tool to impose centralized control upon industry in general, using bank balances and transaction histories to monitor the activity of individual concerns and their compliance with five-year plans and directives. The State Bank never acted as a commercial bank aiming at profit maximization, but purely as an instrument of government policy. Instead of independently and impartially assessing the creditworthiness of the borrower, Gosbank would provide loan funds to individuals, groups and industries as directed by the central government.