Russians Are Rushing for Cash. Should the Kremlin Be Worried?
Households and businesses have added $25.3 billion to their cash holdings so far this year, marking the largest increase since the start of the war.
As Russia prepares to launch its digital ruble, citizens are opting for the more traditional method of cash. In the past year alone, households and businesses have added an astounding 2.1 trillion rubles ($25.3 billion) to their cash holdings, surpassing the previous annual record of 1.8 trillion rubles ($21.7 billion) set in 2023.
The surge in cash demand is attributed to a combination of practicality, public anxiety, and opportunistic tax evasion. Following the disruption of mobile signals and card payment terminals due to Russian jamming of Ukrainian drone attacks, people have resorted to cash as a means of purchasing groceries and paying for services. Concerns over potential government restrictions on bank deposits have further fueled the rush to cash, with rumors of renewed military mobilization prompting individuals to withdraw funds to convert into foreign currency.
Businesses are also contributing to the trend, seeking to avoid taxes by conducting transactions off the books. Despite the staggering figures, the percentage growth in cash usage remains relatively modest, hovering around 11.7% compared to the 22.4% increase seen during the COVID-19 pandemic. The overall share of cash in Russia's money supply has remained relatively stable at around 15%.
Economists caution that while the absolute numbers are significant, the growth in cash usage may not be as drastic as it appears on the surface, as Russians are prioritizing liquid assets over savings accounts due to falling interest rates.
Written by urgent.news from The Moscow Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
