Credit System, the entire web of credit relations and the credit institutions servicing them in a certain country. A credit system under capitalism is a nexus of credit relations between the loaning and investing capitalists, based on the exploitation of workers and involving the circulation of loan capital. The basic forms of credit relations in the capitalist credit system are commercial and bank credit (see Credit under Capitalism). The capitalist credit system includes different credit institutions which mobilise temporarily free monetary capital and profits and turn them into loan capital. The main links of the capitalist credit system are banks of issue, commercial, mortgage and other kinds of banks. The capitalist credit system also includes insurance monopolies, finance associations, investment companies, savings banks, pawnshops, etc. In the epoch of imperialism the capitalist credit system merges with industrial monopolies. Under state-monopoly capitalism, the characteristic features of the credit system are: extensive utilisation of credit resources by the imperialist state for military purposes, the purchasing of part of bank shares by the state, and the capitalist nationalisation of some banks. Developing countries which have chosen economic independence and democratic change have established national credit systems of their own, consisting predominantly of the state and partially of cooperative credit 75 institutions. The credit system under socialism is a complex of planned credit relations, based on public ownership of the means of production, and of the institutions servicing them. Credit relations help to form and utilise the state loanable fund, which is distributed on the basis of credit plans in the form of direct bank crediting. A credit system helps mobilise the temporarily free monetary funds of enterprises, of the socialist country’s state budget and of the general public in order to provide credit for the needs of expanded reproduction (see Reproduction, Socialist), in the interests of building communism and raising the people’s well-being. The socialist credit system functions through a credit mechanism which is a complex of forms and methods of crediting, credit levers and credit incentives for the socialist economy. The credit mechanism is an integral part of socialist society’s economic mechanism and is inseparably linked with its other components. This mechanism is steadily developing and improving as socialist relations of production mature, in particular, credit relations. Further improvements in the credit mechanism and its greater impact on social production to make it more effective and raise quality of work and products presuppose: the transition to fiveyear credit plans with an annual breakdown, more active role for bank credits in financing capital construction, and more severe credit penalties against enterprises failing to honour credit and payment obligations. The basic credit institutions of socialist society are the banks (see Banks under Socialism). Besides, the socialist credit system includes state savings banks (they perform operations involving the retention of the cash savings of the general public, the purchase and sale of state bonds, accepting payments for municipal and everyday services), and the pawnshops (they provide loans to people on the security of their belongings and accept these belongings for safe keeping). Several socialist countries also have a system of credit cooperation. The principles of the credit systems which are common to all the socialist countries are: state monopoly of crediting operations; single credit policy for the entire country; democratic centralism in running the credit system; direct planned bank crediting of the economy; accumulation of the country’s money turnover in the central state bank; extensive use of clearing operations through the credit system. At the same time each socialist country has its own specific features in the structure of its credit system, the methods of providing credits to the economy and the people, and in functioning of the credit mechanism.