Credit under Socialism, a system of planned economic relations, by means of which socialist society mobilises the temporarily free monetary funds available in the" economy and uses them for expanded reproduction on conditions of repayment, fixed terms and payment. The temporarily free monetary funds accumulate in the banking system and form what is called the state loanable fund. The social and economic nature of credit under socialism is dramatically different from capitalist credit. The absolute dominance of public ownership of the means of production determines that credit will be used in the interests of building communism and improving the people’s well-being. In socialist society credit is planned; it is directly linked with the processes of reproduction; it is used to stimulate the steady growth of production, and cannot be used for profiteering operations characteristic of capitalist credit. There are no credit crises in the socialist economy; credit stability is provided by ongoing and planned economic development, by the stability of planned prices and monetary circulation, and by the absence of budget deficits. Credit performs the functions of the planned redistribution of monetary funds, the replacement of ready money in economic turnover and a lever of economic control over the operations of enterprises. This makes it possible to meet the demand of enterprises (or associations) for monetary funds in full and in time; it accelerates the process of turning production and commodity funds into the monetary funds, reduces the time of production and circulation, and accelerates the turnover of monetary funds. Credit is an important source of monetary capital for extending production and implementing scientific and technical progress. It encourages improvements in the proportions of social production because it is one of the basic sources of monetary funds for the planned distribution of the means of production and labour resources between different sectors of the economy and economic regions. The credit method of monetary funds redistribution is characterised by repayment, fixed terms and payment for the right to use the loan, and by principles of socialist economic crediting like the planned, direct and purposeful character of bank credit, its backing by material wealth and its differentiated character; for all these reasons, credit becomes a lever of economic control over the implementation of the qualitative and quantitative indicators of the plan for production and turnover. It reinforces the cost-accounting basis of running enterprises and leads to improvements in the quality of output. Credit granted to enterprises (or associations) may be either long-term or short-term. In the USSR, the ratio between long-term and short-term bank credit investment in the economy was on January 1, 1979, as follows: of total credit investments of 292,100 million roubles, long-term credits amounted to 68,300 million roubles or 23.3 per cent, while shortterm credits amounted to 223,800 million roubles or 76.7 per cent. Short-term credit is granted for a term of up to one year, and in certain instances, of up to two years. It is used primarily to replenish circulating assets for production expenditure, for the Stocks of material wealth, and for servicing trade. To ensure the timely payment for products received the USSR State Bank and the USSR Construction Bank are allowed to grant a credit to the purchasing enterprise which temporarily lacks funds, for a term of up to 60 days at 5 per cent 77 interest; once this term has expired, they are allowed to proceed with further crediting, although at a higher rate of’interest. Short-term credits may be used to replenish and expand the fixed production assets, if these investments are quickly repaid ( capital repairs, rationalisation, mechanisation and automation of production, organisation and expansion of the production of consumer goods, improvements in everyday services, highly effective measures to produce new commodities and improve quality). Long-term credit is provided primarily to expand or replenish basic funds, i. e. for reconstruction, modernisation and expansion of operating enterprises, payments for extensive domestic technological and power equipment used for building industrial facilities and new enterprises (see Expansion and Reconstruction of Running Enterprises). The USSR is able to expand the construction of enterprises thanks to credits granted by the Construction Bank to construction and assembly organisations covering the full estimated cost of construction for a term up to the delivery of the completed enterprise to the customer and the latter’s payment to the contractor. Credit is also granted to the general public for consumer needs. There are also credit relations of a certain type, in which a socialist state borrows money from the general public in the form of state loans (see Loans, State), and cash deposits of the people in banks and savings banks. A certain rate of interest is levied for the credit granted; it is the payment for using the loan. Interest rates depend on the kinds and terms of loans; higher interest rates are imposed as a penalty for overdue loans. As well as internal credit there is also international credit, which reflects the credit relationships of the socialist state with other countries. Credit that the socialist countries grant to each other is an important means of economic cooperation and mutual assistance, development and the reinforcement of the socialist economic integration of the CMEA member countries (see Integration, Economic Socialist). Credit promotes the development of economic relations between socialist and capitalist countries. The USSR and several other socialist countries provide significant credit assistance to newly liberated countries which have launched independent economic development.