4. Three major banks that determined the Soviet banking system

There were three most important banks under the supervision of government which determined the structure of the banking system of the USSR: the Savings banks, the Vneshtorg bank and the Stojbank.

The savings banks in the USSR times cannot be described as fully sovereign institutions. All of them functioned under the Gosbank’s decrees. The main aim was to combine the funds of a savings sector and to transfer these funds into the economy. The pension funds were available within the savings bank’s domain and were paid out directly to the public. Additionally, these banks also bought and sold government bonds in order to organize public lotteries (VEP Agency for banks and banking specialists, Агенство ВЭП 2014).

The Vneshtorg bank has been shared between the USSR’s Gosbank and the Ministry of Foreign trade. The Vneshtorg bank helped to implement foreign trade, whereas all transactions resulting from this trade were controlled by the Central Bank. All foreign arrangements were monitored and confirmed by the CB’ management. By the end of 1967, the Vneshtorgbank had over 1,000 foreign deals all over the world. This credit institution performed a variety of tasks, which included the following: a) the holding of domestic currency and foreign currency on behalf of foreign firms, b) the establishment of the accounts in foreign exchange from home enterprises, c) export and import techniques, d) the provision of credit for exporters and importers, f) USSR and foreign loan management, g) trade in foreign currencies (Kuschpeta O., 1987).

The Strojbank was the only investment bank in the USSR that provided short- and long term credits. The management of the Strojbank had to ensure that the following goals were accomplished: the provision of the long-term credit for individuals and housing (including house building companies), - the provision of the short- term credit for enterprises of precast building caterer, the supervision of non-repayable funds and the provision of finances for foreign investments (Kushpeta O., 1978). The Strojbank was an example of the financial intermediary which collected funds from the state and private sectors. During 70’s the Strojbank performed the tasks of a capital market – a known type of financial establishment in Western economies.

5. The ussr banks abroad

There were 6 banks owned by the USSR governmet which were operating abroad: The MNB bank (Moscowsky Narodnyi bank Limited), the Banque Commerciale pour l’Europe du Nord, the Russian- Iranian bank in Teheran, the Wozchod Handelsbank (Zurich), the Ost-West Handelsbank (Frankfurt) and Donau Bank (Vienna). All of these banks were the USSR’s tools for the development of a trade in the capitalist economies. Due to the Iron Cage regime, the actions performed by these banks could be described as the scouting activities in order to monitor a foreign trade. However, a certain number of the USSR firms had to deal with Western capitalist nations and, therefore, foreign banks of the USSR served as a promotion institution to facilitate trade between the USSR and West. Even though the transparency in business between the USSR and the Western world was highly minimal, history shows that the Soviet government was involved in foreign currency exchange. For example, MNB Bank (one of the oldest foreign banks of the Soviet Union, founded in 1919 in London) actively took part in Eurocurrencies trading and was the fourth largest world trader (Rautava J., 1996).