1. Introduction

In order to understand the current situation in modern Russian banking, it becomes essential to trace back its development stages starting from revolutionary times. The path, during which a Russian banking evolved, reflects a country’s full history. It is a canvas that depicts how far a set of drastic radical changes could influence the formation of a contemporary banking system. The Russian banking system was one of the central issues during the process of the “Great Transformation”. It had to go through the process of financial adjustment and elaboration. In the meanwhile, it happened to survive through the Russian currency crisis (1998) and continued its further transformation in the 21^st century.

The international banking environment consists of a large percentage of foreign investments and, therefore, it becomes a question of a common concern when a specific type of a banking system is being exposed to the political, currency or any other external financial risks. The contemporary world is operating in the market- based environment and any type of financial hazards must be taken into consideration in order to protect and ensure the healthy state of the global financial system.

1. Research Question

Within the concept of banking transformation, three possible research questions appear to be relevant:

1) What were the major changes in the system of Russian banks after the collapse of the USSR?

2) What are the determinants of the modern structure of Russian banks?

3) Which estimates could be attributable to the future of Russian banking?

2. Structure of the paper and the research method

The method which the author will be using for this first bachelor thesis is a historical research design. By applying this method an author will be able to collect, verify and synthesize past events to establish the causal relationships between historical facts. The subject can be investigated within a wide scope of historical literature, which makes the research very intensive and detailed. Another advantageous aspect of this research design is that it is followed by the ambiguity of expert opinions on historical events. These opinions assist in a problem formulation and provide an outlook on the causal relationship between past events.

The structure of the bachelor paper consists of the following parts: first, the author will investigate the subject from a historical point of view and each paper section will consist of a short summary. Secondly, the author will provide the opinion of external experts on current situation and issues. The conclusion will be the final part of the paper which will provide the findings.

2. A brief history of the Russian banking in a centrally-planned economy

The history of USSR banking began with the process of unification of the four powerful republics: the Russian Socialist Federative Soviet Republic (RSFSR), the Ukrainian Socialist Soviet Republic (Ukr. SSR), the Belorussian Socialist Soviet Republic (BSSR), and the Trans-Caucasian Federation. After the merger of the four republics, the prevailing branch of the banking and credit system had mainly derived from the RSFSR.

Before the USSR banking developed into a unified network of banks, it went through a three- stage process, which consisted of the following parts: adjustment to the planned economy during the period of 1917-1932, economic reforms of 1960’s (when all credit institutions had merged into the one monolithic system) and the period of Kosygin’s reforms.