Bolstering the Business Activity and the Fundamental Problem of the National Banking System Reform

Abstract

The subject of the research is the national banking system as part of the country’s monetary system. The purpose of the research was to prove that the national banking system in its current state is fundamentally incapable of supporting business activities in the Russian economy. The paper reveals the reason for such incapability; it is due to the existing contradiction between the whole and the part where the whole is the monetary system of the country having a market nature, and the part is the national banking system that has not changed its structure with the transition from the gold standard to the above-mentioned nature of the monetary system. Within the framework of the latter, banks, in their essence, act as functioning “banknotes”, and as such, they should not be in private ownership or have an interest in making a profit. Meanwhile, they actually behave as commercial companies pursuing their own private interests that do not coincide with the interests of the market (country). Therefore, the modern structure of the national banking system is hampering the country’s economic development. The paper concludes that the current state of affairs must be overcome; the contradiction between the whole and the part should be removed through the conversion of the banking system to a state system in form, private in content and national in essence. In this case, the functioning of the banking system will be directed towards the realization of national interests, the actual support of business activities in the Russian economy.