143 



As mentioned earlier, there are no laws covering 

 mortgages and foreclosures. 



The typical role of Soviet banks has been to 

 dispense government money and credit to state 

 enterprises. These banks have little if any 

 experience assessing risks and managing true loans 

 in a market economy. 



Perhaps the greatest problem arises from the common 

 belief that the only important source of loanable 

 funds is the government. The western concept that 

 loanable funds accrue from deposits and sale of 

 interest bearing paper is not generally understood. 

 Of course, attracting deposits would be difficult 

 today in view of the high rates of inflation in the 

 NIS. To attract deposits would require tax breaks 

 on interest income and indexing of deposits against 

 effects of inflation. 



The ability of NIS governments to "print" money in 

 the traditional manner to fund agricultural credit 

 is severely limited by the certain increase in 

 inflation which would result. 



