In a decentralized economy, credit and capital markets, as well as financial institutions such as banks, investment funds, insurance companies, and exchanges, play an important role in coordinating the intermediate consumption and investment decisions of families, businesses, and government agencies. They also eliminate the risk. The exchange not only facilitates the financing of large firms by a large number of shareholders, but also acts as a protection against poor management of the firm.



Only with the help of financial markets and financial institutions can the problems of intermediate allocation (redistribution) of resources be solved. But since loans (in the optimal case) are calculated in monetary amounts, a stable currency is a necessary condition for the healthy functioning of the financial system.



In a planned economy, governed mainly by setting production standards and centrally allocating resources, prices, money, and financing play a secondary role. Norms must be met regardless of whether they lead to losses and financial deficits or not. This applies not only to manufacturing enterprises, but also to government agencies, from local to central. Losses and deficits are more or less automatically compensated through financing, otherwise production plans may remain unfulfilled. Thus, participants in economic processes operate in an environment of "soft budget constraints."



The functions of the banking system in a planned economy, in addition to providing the necessary finances, consist only in monitoring the figures in this area. Other financial institutions and financial markets are practically non-existent.



Many prices, especially for basic necessities, are set below the self-sufficiency level. As a result, excessive demand generates either a card system or queues. This pricing policy is most likely caused by three reasons. First, the demand for consumer goods is almost always high, which seems to imply that the planning of production standards for certain goods was correct. Secondly, in a communist society, the distribution of such essential goods as food and housing according to "need" rather than income is dictated by ideology. But the main reason is probably the third one. The shortage of goods caused by prices set below market value allows officials and managers to distribute goods at their discretion, in exchange for political and other benefits or for other benefits. If you lean more towards casino games, Melbet has still got you covered. Sign up with the promo code for melbet to unlock a 450% casino bonus of up to ৳4,46,000, plus 220 free spins — available across the first 3 deposits on the platform. To qualify, you'll need to choose the Melbet casino bonus at the time of registration and make a minimum deposit of ৳1,260.