Demand for cash is rising rapidly in Russia
For the fifth month in a row, Russians have been actively withdrawing money from banks and converting it into cash. In June alone, the amount of cash in circulation rose by nearly 450 billion rubles, and experts say this is a sustained trend. One reason cited is people’s desire to keep a cash reserve due to the risk of disruptions in access to banking services and the internet.
According to data from the Central Bank of the Russian Federation, the amount of cash in circulation increased by another 449.7 billion rubles in June. This is 18% more than in May, when this figure rose by 386.2 billion rubles. Overall, from February through June, the amount of cash in the Russian economy increased by nearly 1.9 trillion rubles. On average, this amounts to about 380.7 billion rubles per month, or approximately 12.6 billion rubles per day. The largest outflow of funds from banks this year was recorded in April—when Russians withdrew 607.3 billion rubles.
Yuri Belikov, managing director of the rating agency “Expert RA,” believes that we can now speak of a sustained trend toward a shift to cash. According to him, some businesses are moving into the shadow economy due to the growing tax burden, while ordinary citizens want to have a supply of paper money in case of disruptions to the internet or banking services. The situation is already causing concern within the Russian banking system itself. Taras Skvortsov, Deputy Chairman of the Board at Sberbank, called this a “very alarming development” during the St. Petersburg International Economic Forum. “We are not seeing an increase in cash withdrawals or deposits made through ATMs or terminals. In other words, cash is remaining in the hands of the public,” he said.
In effect, this means that the money people are withdrawing from banks is not flowing back into the financial system. This creates additional risks for banks, as they have fewer resources available for lending and other operations.
Experts note that the rise in demand for cash may indicate a decline in public confidence in the financial system and people’s desire to have quick access to their savings in case of emergencies. This trend is also influenced by economic uncertainty, military risks, and concerns about potential technical failures in the banking infrastructure. This is reported by Russian media.
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