Foreign-Exchange Monopoly

the exclusive right of a socialist state to carry out transactions involving monetary exchange values and also to administer the foreign-exchange fund belonging to the country. The foreign-exchange monopoly is indissolubly bound up with the monopoly on foreign trade. It permits a socialist state to maintain its international accounts on a planned basis, to concentrate its currency resources in state credit establishments authorized to carry out currency transactions, to make rational use of currency exchange values for the development of the socialist economy and thus shield it from business fluctuations on the currency market, to strengthen the monetary system of the country, and to coordinate the economic development plans of the socialist countries.

In the USSR, the foreign-exchange monopoly has existed in fact since the nationalization of foreign trade (Apr. 22, 1918); although officially only since the Decree of the Sov-narkom (Council of People’s Commissars) of the RSFSR of Oct. 6, 1921, has the People’s Commissariat for Finance been entrusted with the responsibility for buying gold, platinum, and foreign currencies (all other organizations, institutions, and individuals being excluded from this area). In April 1922 the monopoly right of the purchase and sale of gold, silver, platinum, and foreign currencies was transferred to the Gosbank (State Bank) of the USSR. In October 1922 stock-exchange trade of foreign currency was permitted, and since February 1923 Gosbank has retained only the monopoly on the purchase of gold and silver coins. Actually, however, the state exercised complete control over valuta transactions. With the decision of the Central Executive Committee and the Sovnarkom of the USSR of Jan. 7, 1937, entitled “On Transactions Involving Exchange Values and on Payments in Foreign Currency,” the foreign-exchange monopoly was sanctioned by law. The Gosbank of the USSR was granted the exclusive right to conclude transactions involving foreign currency and currency values on the territory of the USSR. On behalf and under the control of Gosbank, foreign currency transactions are also carried out by the Bank for Foreign Trade of the USSR. The right to purchase gold, platinum, and metals of the platinum group extracted in the USSR is entrusted to the Ministry of Finance. The foreign-exchange monopoly in the USSR extends to transactions involving foreign currency and payment documents (promissory notes, checks, letters of credit, and the like), made out in foreign currency; precious metals (gold, silver, platinum, and metals of the platinum group) in the form of coins, ingots, and ores; and foreign stock-exchange valuables (stocks, bonds, and coupons). The foreign-exchange monopolies in other socialist countries are carried out by credit institutions authorized by the state (as a rule, by banks of issue).