located in rural areas. The main function of the bank has
been to mobilize the cash resources of the population for investment,
through obligatory periodic transfers of deposited funds to the National
Bank. In the 1966-70 period subsidiary functions of the bank gained in
importance, including small-scale commercial bank transactions, personal
loans, and tax collections. Receipts from personal savings deposits
accounted for 70 percent of total cash receipts in 1970. Since the
beginning of 1970 the bank has also made loans for private housing
construction.

The schedule of payments to the National Bank has been sufficiently
stringent to induce the Savings and Loan Bank to mount special
educational programs for attracting savings, particularly in rural
areas, and to seek ways of stimulating cash collections from its other
activities. To this end the bank is giving special attention to finding
more effective means for identifying cash reserves held by the
population. One avenue the bank has been exploring is to gain greater
knowledge of the timing of income receipts and of the uses to which
incomes are put.

The volume of savings has been steadily mounting; it rose at an average
annual rate of more than 20 percent in the 1966-70 period and was 2.5
times larger at the period's end than at its beginning. In 1970, 13.6
percent of the population's cash income was deposited in savings
accounts, compared to 5.8 percent in 1960. More than 65 percent of the
population's cash assets in 1970 were on deposit in savings accounts, as
against 56.6 percent five years earlier. Under the economic plan for the
1971-75 period, savings deposits of the Savings and Loan Bank are
scheduled to increase by 87 percent--the equivalent of an annual 13.4
percent growth rate. An important reason for the growth of savings has
been a general shortage of consumer goods.

Loans granted by the Savings and Loan Bank for private housing
construction in 1970 amounted to 2.1 billion lei. In 1971 the bank
planned to provide construction loans totaling 2.9 billion lei.
Information on other bank transactions has not been published.

Credit Policy

Interest rates do not reflect the scarcity of money or the element of
risk. They are used by the government as one of the economic levers
intended to motivate enterprises toward greater efficiency. In 1969 the
average rate for short-term operating credits was 2.9 percent; actual
rates ranged from less than 1 perc