The Russian Federation

Abstract

The Russian Empire’s banking system was overhauled and the State Bank of the Russian Empire was founded in Saint Petersburg by imperial decree in 1860 during the reign of Czar Alexander the Second. The establishment of the central bank was part of spate of economic reforms that were undertaken when capitalism was gaining ground in the Russian Empire while considerable state interference in the economy was still needed. The bank introduced sweeping monetary reforms in the 1880s; these included the introduction of the gold standard in the Russian Empire and the bank acquiring the right to issue currency in 1897. After the October Revolution of 1917, the State Bank of the Russian Empire was converted into a credit institution of the new Soviet government. There was a state monopoly on banking, and the People’s Bank of the RSFSR was the only bank in the country. It was used to provide loans to individuals and industries with ties to the party and to promote compliance with the Soviet Five Year Plans. Eventually, due to President Gorbachev’s policy of perestroika or the restructuring of the political and economic systems of the Soviet Union, a few other banks were established. The Bank of Russia, founded on July 13, 1990, inherited the mantle of the central bank from the Russian Republic Bank of the State Bank of the Union of Soviet Socialist Republics. The young central bank immediately had to deal with a rocky transition to the free market, the Russian financial crisis of 1998, and a subsequent debt default, but has since benefited from energy exports.