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Romania
Index
The Role of Banking in a Centrally Planned Economy
The banking system was nationalized soon after the
installation
of the communist regime and replicated the system that had
evolved
in the Soviet Union. Although organizational reforms were
instituted in the course of the following four decades,
the basic
mission of banking and its relationship to the rest of the
economy
remained unchanged.
The role of banking in the Stalinist economic model
differs
markedly from that in a market economy. Banks are state
owned and
operated and are primarily an instrument of economic
control. They
do not compete for customers; rather, customers are
assigned to
them. Nor are they in business to make a profit, because
in the
absence of money and capital markets, there is no
mechanism to
assign an accurate price for credit and thereby earn a
fair profit.
Economic reforms in the late 1970s assigned greater
responsibility to the banks for policing the economy to
ensure that
enterprises were operating and developing in compliance
with the
national plan. The banks accomplished this mission by
monitoring
enterprises' operations and assessing financial penalties
for
inefficient use of resources. As one of the three
principal sources
of money to finance operations and investments--the others
being
state budget allocations and profits retained by
enterprises from
the sale of commodities--banks exercised considerable
influence
over all economic units.
Data as of July 1989
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