State Bank of the USSR

State Bank of the USSR
Государственный банк СССР

Former head office of the Gosbank in Moscow, originally the branch of the State Bank of the Russian Empire
Headquarters	12 Neglinnaya str., Moscow, Soviet Union
Established	October 1921 (October 1921)
Dissolved	20 December 1991 (1991-12-20)
Central bank of	Soviet Union
Currency	Soviet ruble SUR (ISO 4217)
Preceded by	State Bank of the Russian Empire (1860–1917) People's Bank (1917-1920)
Succeeded by	Central Bank of Armenia Central Bank of Azerbaijan National Bank of the Republic of Belarus Bank of Estonia National Bank of Georgia National Bank of Kazakhstan National Bank of the Kyrgyz Republic Bank of Latvia Bank of Lithuania National Bank of Moldova Bank of Russia National Bank of Tajikistan Central Bank of Turkmenistan National Bank of Ukraine Central Bank of Uzbekistan

The State Bank of the USSR (Russian: Государственный банк СССР, romanized: Gosudarstvennyy bank SSSR), from 1921 to 1923 State Bank of the RSFSR 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 from 1922 to 1991. After an extended gap in 1920–1921, it took over the legacy of the State Bank of the Russian Empire. With the dissolution of the Soviet Union, it was terminated on 1 March 1992 and its local operations were taken over by the newly formed central banks of the post-Soviet states such as the National Bank of Kazakhstan, Central Bank of Russia (CBR), or National Bank of Ukraine, while the CBR inherited its central operations.

The 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.

History

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.

In the 1970s, the State Bank was involved in the creation of Ost-West Handelsbank in Frankfurt (1971), Donau Bank in Vienna (1974), and East-West United Bank in Luxembourg (1974) together with the Foreign Trade Bank of the USSR.

Exchange rate between the Soviet ruble and major world currencies, February 1985

In the late 1980s, the role of the State Bank evolved as new specialized banks were created, even though they remained within the framework of a single-tier system.

• 
  Branch building in Stalino (later Donetsk), shortly after inauguration in 1928
• 
  The same building in 2008

Demise

The Gosbank started to unravel with the establishment (or, in the Baltic Republics, revival) of autonomous central banks in individual Soviet republics. The Estonian SSR, implementing a plan prepared by a group of economists led by Siim Kallas, decided in late 1989 to re-create the Bank of Estonia, which opened on 1 January 1990. Latvia and Lithuania followed suit in March 1990, taking over operations of the State Bank on their respective territories. On 13 July 1990, the Russian Soviet Federative Socialist Republic (RSFSR) similarly established a separate State Bank of the RSFSR. On 2 December 1990, the Supreme Soviet of Russia passed legislation that referred to the State Bank of the RSFSR as the "Bank of Russia" and granted it attributes of a central banking. The Ukrainian SSR followed suit in early 1991.

Despite legislation passed also in December 1990 at the USSR level to organize the relationship between the Soviet Gosbank and the new institutions in some of the republics including Russia, relations between the respective central banks soon became conflict-ridden. Deputy Premier Grigory Yavlinsky advocated the creation of a "banking union", namely a formal monetary union among the Soviet Republics, in the New Union Treaty, but that attempt rapidly foundered in the second half of 1991.

In late November 1991, the Supreme Soviet of Russia authorized the Bank of Russia to assume the assets and liabilities of the Soviet Gosbank by 1 January 1992 and to act as a source of ruble liquidity for the other post-Soviet states; eventually, the latter adopted their own respective currencies, starting with the Baltics in mid-1992 and ending with Tajikistan in May 1995. The State Bank of the USSR was dissolved on 20 December 1991, a few days before the USSR itself.

Leadership

The following is a list of the chairmen of the Board of the State Bank. The chairman was appointed by the Premier of the Soviet Union.

Name (governor)	Photo	Term of office		Appointed by
		Start of term	End of term
Aron Sheinman		1921	1924	Vladimir Lenin
Nikolai Tumanov		March 5, 1924	January 16, 1926	Alexei Rykov
Aron Sheinman		1926	1929
Georgy Pyatakov		April 19, 1929	October 18, 1930
Moissei Kalmanovich		October 18, 1930	April 4, 1934	Vyacheslav Molotov
Lev Maryasin		April 4, 1934	July 14, 1936
Solomon Kruglikov		July 14, 1936	September 15, 1937
Alexey Grichmanov		September 15, 1937	July 16, 1938
Nikolai Bulganin		October 2, 1938	April 17, 1940
Nikolai K. Sokolov		April 17, 1940	October 12, 1940
Nikolai Bulganin		October 12, 1940	May 23, 1945	Joseph Stalin
Yakov Golev		May 23, 1945	March 23, 1948
Vasily Popov		March 23, 1948	March 31, 1958
Nikolai Bulganin		March 31, 1958	August 15, 1958	Nikita Khrushchev
Alexander Korovushkin		August 15, 1958	August 14, 1963
Alexey Poskonov		1963	1969
Miefodiy Svieshnikov		1969	1976	Alexei Kosygin
Vladimir Alkhimov		October 11, 1976	January 10, 1986
Viktor Dementsev		January 10, 1986	August 22, 1987	Nikolai Ryzhkov
Nikolai Garetovsky		August 22, 1987	June 7, 1989
Viktor Gerashchenko		June 7, 1989	August 26, 1991	Valentin Pavlov
Andrei Zverev		August 26, 1991	December 20, 1991	Ivan Silayev

See also

• Economy of the Soviet Union
• Banking in the Soviet Union
• List of central banks

External links

• Soviet Banking System, Pekka Sutela, Answers.com (accessed 2012-08-02)
• Nikolai Rovinsky (1944). "The State Budget of the USSR". (in Russian)