After the October Revolution, the banking system was nationalised before the industrial and commercial systems, and this priority underscores the strategic importance conferred upon controlling monetary flows. The mammoth public debt that the Bolsheviks inherited upon their accession to power was only a part of the reason for this; the attempts to exert stringent financial discipline were also prompted by the recognition that private profiteering had been faciliated by the instability of the currency and by excessively easy access to credit. But since a high rate of monetary emission took place during the Civil War, to finance both the war and free public services, financial stability remained a remote goal. The market bases of the NEP, epitomised in economic accounting, had to be grounded in a stable ruble. The achievement of this aim crucially depended on closely monitoring the flows of credit. This was facilitated by a combination of the retention of state control over the biggest (joint-stock) banks and the formation of a network of smaller banks; the former was to serve state industry and trade, while the latter was intended to meet the needs of private clients.


Current Account Trade Balance State Credit Public Sector Bank Private Trader 
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Copyright information

© Arup Banerji 1997

Authors and Affiliations

  • Arup Banerji
    • 1
  1. 1.Eurasia ProgrammeIndira Gandhi National Centre for the ArtsNew DelhiIndia

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