Until recently, it was assumed that the origins of the Belarusian banking system go back to January 3, 1922 – the date on which the Byelorussian Office of the State Bank under the People's Finance Commissariat of the Byelorussian Soviet Socialist Republic became operational in Minsk.
However, the research into archive materials and the study into collections of financial documents and securities made it possible to obtain a compelling documentary evidence that the first banking institution in the territory of present-day Belarus was started at least half a century earlier, i.e. on January 8, 1870, when the Decree on the Establishment of the City Public Bank in Gomel issued by the Senate of the Russian Empire was signed. The history of the making and the development of the Belarusian banking system goes back to that time.
Why indeed the small borough of Gomel rather than a major governorate centre became the first Belarusian town to have a bank? The fact is that a large-scale railroad construction was underway in the second half of the 19th century in the Russian Empire, including Belarus. For example, in 1862 the St Petersburg – Warsaw railroad track passed through Grodno, in 1868 there were Vitebsk and Polotsk stations on the Riga – Orel railroad line, and in 1871 the Moscow – Brest railroad connected Orsha, Borisov, Minsk, and Baranovichy.
The railroad gave each region through which it ran a powerful stimulus for economic growth as the railroad construction was patronized by the state. It is no accident that the State Bank of the Russian Empire which was established by Emperor Alexander II in 1860 started to lend actively to the railroad construction almost immediately after the opening thereof. It allocated large amounts of money to the Grand Russian Railway Society as early as 1861-1864.
The Belarusian town of Gomel did not stand on the sidelines as well. Business activity in Gomel increased markedly following the abolition of serfdom in Russia and a year later the construction of the Libava – Romny railroad line connecting Ukraine and the Baltic States as well as the Polesye railroad line linking the entire southern part of present-day Belarus with Poland and Ukraine was started therein. All this led to a very rapid growth of population. There was a need for a full-fledged financial institution to address the pressing issues of urban life. This might have given rise to the Senate's corresponding decision to set up the City Public Bank in Gomel.
At the time of the bank's establishment its core capital was set at 20,000 rubles. The National Bank's museum collection contains a cashier's check of this bank, an incontrovertible "material evidence" of the bank's existence. Like many other city banks this first private commercial monetary institution in Belarus extended long-term loans against the pledge of urban and building plots. Funds from municipal budget were used to form capital of such banks and credit facilities were extended mainly to medium and small-sized business entities. Loans were also granted to the town council and local zemstvo (local government), whereas operational profit was allocated to municipal amenities and charity. Later, the towns of Polotsk, Vitebsk, Borisov, Mogilev, and Igumen also had, besides Gomel, their own city banks.
Consequent upon the expansion of the railroad construction, the State Bank of the Russian Empire opened its branches in a number of Belarusian governorate cities, including in Minsk in 1881, Vitebsk and Mogilev in 1883, and Grodno in 1884. Along with providing financial support to the railroad construction, governorate branches were authorized to lend to industry and trade, exchange time-worn banknotes for new ones and large-denomination banknotes for small-denomination ones and visa versa, redeem interest-bearing securities coupons, take cash from legal and natural persons to transfer it to the State Bank and its offices and branches, accept deposits, and extend loans against the pledge of interest-bearing securities, shares, and bonds.
According to the data available, the Moscow Office was ranked first among the State Bank's institutions in terms of accounting operations volume, leaving the second and the third places to Odessa and Kiev (towards the end of the 19th century), respectively. The Minsk Office enjoyed the fifth position on that list and thus left all other branches in the Northwestern region behind. By the end of the 19th century Minsk had turned into the largest banking center in the region.
Even though the State Bank was originally the largest commercial bank in the Russian Empire, since 1870s the situation took a different turn due to the development of non-state financial institutions which offered soft credit terms to lure borrowers from the State Bank, thereby building their own client base.
The National Bank's permanent exhibition on the history of financial institutions holds notes and a 250-ruble share of the Minsk Commercial Bank issued in 1896. It is a fact that on April 21, 1873, the Minister of Finance of the Russian Empire approved the Statute of this bank and that on September 10 it became operational. Local businessmen acted as the bank's promoters. At the time of the bank's establishment its core capital was set at 1.5 million rubles.
Pursuant to the Statute, the Minsk Commercial Bank was entitled to discount bills, receive payments under securities and bills, carry out operations in precious stones, accept deposits, keep valuables in custody, and transfer money to its branches in other cities. The bank's representative offices were opened not only on the territory of Belarus (in Gomel, Mogilev, and Pinsk), but also in some other cities of the Russian Empire, including Libava, Romny, Konotop, Zhitomir, Belaya Tserkov, Cherkassy, Vorozhba, Sumy, and Rovno.
Following the Russian Empire's banking reform in the second half of the 19th century, by the early 20th century an extensive credit system had been developed, new types of banks had been established, and fundamentally new kinds of banking operations had been introduced and rapidly developed thereafter. The credit system comprised the State Bank, commercial joint-stock banks, mortgage banks, mutual loan societies, city banks, and credit cooperative society. Such a system had been functioning in a stable and well-coordinated manner up to 1917.
On December 14 (December 27 O.S.), 1917, following the victorious October armed uprising, the All-Russian Central Executive Committee (the VTsIK) approved Decree "On Banks' Nationalization". The state declared monopoly on banking business, the People's Bank of the RSFSR (Russian Soviet Federative Socialist Republic) was set up, and its local offices and branches were opened. The establishment of the institutions of the People's Bank was not commonplace in Belarus due to the civil war and military intervention. Nevertheless, there is information that in March 1919 the Minsk District Office of the People's Bank was set up within the system of the People's Finance Commissariat of the Lithuanian-Byelorussian Republic. Actually, it was a body responsible for supplying monetary notes. As early as January 19, 1920, the People's Bank of the RSFSR and its local bodies, including the Minsk District Office, were disbanded and all their assets and liabilities were transferred to the bodies of the People's Finance Commissariat of the RSFSR.
After that, on December 4, 1921, the Council of People's Commissars (the CPC) and the VTsIK decreed the establishment of the State Bank (Gosbank) of the RSFSR.
On December 3, 1921, the CPC of the Byelorussian Soviet Socialist Republic passed resolution on the organization of the Byelorussian Office of the State Bank in Minsk (Minutes No. 32 of the SPC's meeting).
The State Bank's Office launched operations in Minsk on January 3, 1922. Local branches in Vitebsk, Borisov, Bobruisk, and Mogilev and agencies in Slutsk, Mozyr, Orsha, Klimovichi, and Polotsk were opened.
In 1923, in connection with the formation of the USSR, the State Bank of the RSFSR was transformed into the State Bank of the USSR. The Byelorussian Office was incorporated therein. In January 1927, the Gomel branch, formerly under the direct control of the State Bank of the USSR, was reassigned to the Byelorussian Office.
In 1923-1925, the affiliates of all-union joint-stock banks – Prombank, All-Union Cooperative Bank, and, beginning in 1936, Torgbank – began their operations in the republic. These years saw the formation of the local bank network. In 1923, the Gomel Workers' Bank was opened and in a year or so it was transformed into the local Communal Bank. In 1925, Belcommunbank was set up.
To pool available funds for the purpose of lending to farms, district agricultural credit partnerships – Byelorussian, Gomel, Vitebsk, Orsha, Kalinin, Bobruisk, Mogilev, Mozyr, and Polotsk – were established. In 1924, the Byelorussian partnership was transformed into Belselbank (Byelorussian Agricultural Bank) which played a principal part in providing loans to agriculture. At that time, the State Bank and specialized banks devoted themselves entirely to rebuilding and reconstructing the national economy.
Tackling these key issues was only possible on the basis of hard currency. Therefore, with the commencement of NEP (new economic policy), the authorities set out to strengthen the monetary system. In 1922-1924, a monetary reform was enacted. As a result, a monetary system was established, whereas the State Bank turned into the money issuing center of the USSR and money circulation regulator. Introduction of a sound currency was beneficial to production growth and fostering the economy as a whole.
As a result of the restructuring of the banking system, the following entities were functioning in Belarus between 1932 and 1959: Communal Bank, offices with branches of the State Bank of the USSR, Prombank of the USSR, Selkhozbank of the USSR, and Torgbank of the USSR (until 1957).
Just prior to WWII, in 1940, there were 10 regional (provincial) offices and 184 branches of the State Bank in Belarus employing 4,087 staff. The Great Patriotic War turned out to be a real endurance test both for the Belarusian bankers and the entire nation. On June 25, 1941, the Byelorussian Office of the State Bank was moved to Tambov (Russia), then, in November, to Karaganda (Kazakhstan), and in March 1942, to Gorky (Russia). The CPC of the USSR decreed the closure of the Office on September 9, 1943. It resumed its operation in October 1943, moving to Gomel in December and to Minsk in July 1944.
Arranging for money circulation has always been and still remains one of the major functions of the state banking system, including the Belarusian banking system, at all stages of the development thereof. The 1947 monetary reform was an important event in this respect.
Shortly after the end of the recovery period there was need for both corresponding adjustment of the monetary system and further improvement of the bank's credit ties with the national economy. As early as 1959, reorganization of the banking system took place. Specialized banks were disbanded with their functions transferred to the State Bank and Stroibank of the USSR. Since 1959, the Belarusian banking system was represented by the institutions of the State Bank and Promstroibank of the USSR.
The banking system was subject to a major reorganization in 1987 as well. Belarusian republican banks with their branches of the State Bank, Vnesheconombank, Savings Bank, Promstroibank, Agroprombank, and Zhilsotsbank of the USSR were established and were operating on the basis of self-sufficiency and self-finance.
Perestroika that started in 1985 laid the basis for the transition of the existing monetary system to a new qualitative state and the beginning of the making of the two-tier banking system.
The Declaration of State Sovereignty of the Byelorussian Soviet Socialist Republic (hereinafter – “the BSSR”) was adopted on July 27, 1990 (the Declaration was granted the constitutional law status on August 25, 1991).
On December 14, 1990, the Supreme Soviet of the BSSR passed laws “On the National Bank of the Byelorussian Soviet Socialist Republic” and “On Banks and Banking in the Byelorussian Soviet Socialist Republic” which became effective from January 1, 1991.
On December 21, 1990, the Supreme Soviet of the BSSR adopted Resolution declaring the USSR banks’ branches with their establishments, enterprises and organizations located in the BSSR to be the property of the independent state.
The establishment of the National Bank was finalized on April 1, 1991.
The Belarusian banking system entered its modern history.
The National Bank of the Republic of Belarus created the national currency in the most challenging environment of the early 1990s crisis. This made it possible not only to stabilize the economy but also preserve independence of the Republic of Belarus. In addition, since the mid 1990s the issue center has been actively involved in creating and issuing commemorative coins which retain the most essential information about our state and have already become the hallmark of Belarus.