ABSTRACT
The aim of this chapter is to provide an overview of the role of money and banking in the former socialist countries in Europe. The model was inspired by Marxist theory, as developed and promulgated by Lenin. In a centrally planned economy, the entire banking sector is nationalised and provides more than simply the state monopolisation of money and credit. It also provides a mechanism for gathering and processing the whole spectrum of financial information (reflecting production and employment at enterprise level) necessary to control the economy. In the former centrally planned economies of Central and Eastern Europe, the banking system, described as a monobank system, tended to be a part of the state bureaucratic mechanism and was totally submissive to the government (Communist Party). The state set policy and the central bank implemented it.
