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- October 17, 202612°
- BIST10011,722-2.89%
- USD49.42+0.06%
- EUR55.41+0.20%
- GOLD4,188.30+0.44%
- INTEREST37.00%-1.00
- BITCOIN81,638-0.60%
- October 17, 202612°
Russia’s cash holdings rise by 2.1 trillion rubles to wartime record
Cash holdings of households and businesses in Russia rose by 2.1 trillion rubles in the first months of 2026, recording their largest increase since the war began. Disruptions to card payments, concerns over deposits, informal business activity and falling interest rates boosted demand for cash.
Cash in circulation in Russia increased by 2.1 trillion rubles, or approximately 25.3 billion dollars, in the first months of 2026 as households and businesses made withdrawals. This marked the largest increase recorded since the war began.
The increase also exceeded the 1.8 trillion rubles added to cash holdings between January and August 2023. The activity at that time was attributed to withdrawals by people leaving Russia during the military mobilization, panic caused by the short-lived Wagner mutiny and informal payments linked to mercenaries fighting in Ukraine.
Record cash circulation projected
Sberbank estimates that cash in circulation in Russia could grow by 3.8 trillion rubles, or approximately 45.8 billion dollars, during 2026 as a whole. If the forecast materializes, the annual increase will reach its highest level on record.
The acceleration in cash withdrawals in February coincided with Russia beginning to regularly cut mobile communication signals in response to possible drone attacks from Ukraine. The signal disruptions made card terminals and mobile banking applications unusable.
Artyom, a Moscow resident identified by a pseudonym in news reports, said cards stopped working during citywide internet outages in the spring. According to Artyom, cash became the only option for grocery shopping and paying for services. Svetlana, who lives in the Samara region, said she regularly encountered problems paying by card at supermarkets during the first months of the year; she added that internet outages had largely ended by the summer.
Concerns over deposits and mobilization
Public concerns about savings held in banks also fueled demand for cash. Communist Party leader Gennady Zyuganov said in June that the 67 trillion rubles Russians held in banks was enriching bankers, arguing that the funds should be used for manufacturing or the war effort.
Dmitry Orlov, deputy chief executive of Fora-Bank, said high cash withdrawals reflected not only internet outages but also a desire to take precautions in response to unsettling statements by public officials suggesting that bank deposits could be frozen.
Rumors of another military mobilization also prompted some people to explore options for moving abroad. Because Russian bank cards do not work abroad, those planning to leave the country had to withdraw cash to buy euros or dollars.
Tax burden pushes businesses toward cash
Business behavior also contributed to the increase in cash use. In January, the government raised the value-added tax from 20% to 22% and lowered the income threshold at which companies must pay taxes.
Some small businesses are choosing to operate informally in order to remain below the threshold or reduce their expenses. Some shops, coffee stands, repair shops and hotels in Moscow and smaller regional cities are requesting cash instead of electronic payments. Some businesses are also offering small discounts for cash payments.
Taras Skvortsov, Sberbank’s chief financial officer, said the main reason money was leaving the banking system was that companies were keeping cash in circulation for use in “gray-market” transactions rather than depositing it back into banks. This trend is contributing to the growth of Russia’s informal economy and an increase in tax evasion.
The informal economy is estimated to account for approximately 11% of gross domestic product. Tax-related crimes increased 17% year on year in the first half of 2026.
Impact of the cash increase on banks
Cash leaving the banking system reduces the capital banks can use to lend to consumers or purchase government bonds that finance the budget deficit and infrastructure projects.
Skvortsov warned that the liquidity squeeze could eventually force the Central Bank to take supportive measures.
However, the increase in cash appears more limited when measured as a share of the total money supply. Cash in circulation grew 11.7% between January and July. The rate remained close to the level recorded in 2023 and was below the 22.4% increase seen during the most intense period of the COVID-19 pandemic.
Cash accounts for approximately 15% of Russia’s total money supply, defined as M2, and that share has remained largely stable.
Moscow-based economist Yegor Susin said the long-term decline in cash’s share of the market had reversed. Susin said that, after seasonal fluctuations were taken into account, the overall picture did not point to an extreme situation.
Janis Kluge, an economist at the German Institute for International and Security Affairs, noted that readily accessible current-account balances had also increased alongside cash. Kluge said falling interest rates were the main reason households and businesses were keeping their money in more liquid assets instead of fixed-term savings accounts.
The Central Bank of Russia cut its policy rate to 14% last month, marking the 10th consecutive reduction. The rate stood at 18% a year earlier. Falling interest rates made it less attractive to keep savings in deposit accounts.
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