2. Economic reforms in 1960 and Kosygin’s reform process

This period brought larger changes to a fragile and underdeveloped banking system of the USSR. The new rules made several adjustments to the originally established banking network. The Prombank transformed into Strojbank. The specifics of this transformation implied that this bank was the only institution responsible for investments, though in reality it rarely performed those duties. The Tsjekom and the Selkhov banks had been taken under the Gosbank’s control. During the period of Khrushchev governance, the Central Bank of the USSR continued its monopolistic actions over the whole economy. Unfortunately, the notion of a unified banking system had finally abolished any type of commercial credit (Garvy G., 1977).

After the second period of reorganization it became impossible to leave a credit system unchanged. Therefore, a set of Kosygin’s reforms was applied in order to implement new credit alterations. The main purpose was to multiply the role of credit in the planned economy of the USSR (Popov G.H., 2009). This policy subsequently aimed at: growing a business financing with the help of bank credit, enlarging bank operations so that they become the financial intermediary between the enterprises, and developing long-term credit for future investments. A noticeable fact within the scope of a credit reform is that small and mid-capitalization businesses were forced to rely on short-term bank credit in order to secure their current assets and the amount of this credit became more available than in previous times (Kuschpeta O., 1978). In regard to long-term credit, it is worth mentioning that quite a few modifications had been made since the Tsjecom bank merged with the Gosbank. The long-term credit sought to facilitate a technological progress and widen the current enterprises. The specifics of the long and short – term credit systems will be discussed in the following sections.

3. The Gosbank of the ussr

The Gosbank (its full name is: Gosudarstvenny bank Souza Sovietskikh Sozialisticheskikh Respublik) was the head institution throughout the baking history of the USSR. It could be defined as follows: “it is the bank of issue, the credit bank of the national economy, the central clearing and currency regulating agency of the USSR and the regulating agency of the money in circulation” (Kuschpeta O., 1978). USSR banking was entirely based on the actions of the Gosbank, therefore its organization and operations were the central question of the Soviet banking. From the moment the USSR Central Bank merged commercial and private banking, its central activities continued to evolve as time passed (Gosydarstvennyi Bank SSSR, 2014). At an early stage it was established that all monetary transactions had to be a subject to the Central Bank (the Gosbank) regulations. In a nutshell, the Gosbank had heterogeneous targets. First, a bank had a total control of the money in circulation, meaning that it supervised the financial and economic activities of all economic establishments. Second, to cover the needs of the separate economic entities it became a provider of a short- term credit and its long-term credit had been granted for agriculture, customer interactions and housing construction. The management structure of the Gosbank was based on democratic centralism laid down by Lenin. The central supervisory board was located in Moscow and the bank itself had a number of its offices established throughout the whole country. The central management board comprised a Chairman, his alternates and the heads of CB’s major departments: the Economic Planning Department, the Department of money in circulation, the Financing and Investment department, the Foreign Exchange department, Cash-Issue operations, a central book- keeping, the Accounting Department, the Treasury Department and the other (Ellen Jonhson J., 1994). A balance sheet of the Gosbank presents the following:

Assets	Liabilities
Gold and foreign currency holdings Outstanding loans Securities (shares in Soviet banks abroad, Vneshtorg bank etc.)	Registered capital and Reserves Banknotes in circulation Deposits (government, enterprises and organizations) Deposits of the Stroj bank and Vneshtorg bank Deposits of the savings societies

Table 1: The Gosbank’s Balance Sheet. Source: Kuschpeta O., 1978