From September 1 to 24, the amount of cash in circulation increased by 386.3 billion rubles, according to the Central Bank of the Russian Federation’s оперативная statistics. In August, clients withdrew 434 billion rubles from banks into cash, and in July the outflow reached 620 billion rubles and became the highest this year.
From February to September, the outflow continuing for eight consecutive months increased the cash money supply in the country by 2.9 trillion rubles. According to the Central Bank of the Russian Federation’s forecast, by the end of the year this figure may rise to 3.7 trillion rubles.
As The Moscow Times writes, demand for cash at the forum of the Association of Russian Banks was explained by Alfa-Bank’s chief managing director Vladimir Verkhoshinsky. He linked it to the authorities’ measures to legalize the economy and said that since the beginning of the year, the population has on average been withdrawing half a trillion rubles a month and taking the money into cash.
Verkhoshinsky added that banks, in response, have again begun raising deposit rates, but this has not yet produced any noticeable result. At the same event, he said that tax changes, on the one hand, have replenished the budget, and on the other — are pushing people into the “gray economy”.
Research fellow at the Berlin Carnegie Center for the Study of Russia and Eurasia Alexandra Prokopenko told The Washington Post that what is happening is linked to growing fear and a loss of trust in the banking and financial system. She considers the scenario of nationalizing deposits unlikely, but does not rule out restrictions on cash withdrawals.
To curb the growth of the cash supply, since May the Central Bank has required banks to more carefully check the origin of cash from clients who frequently deposit it into their accounts: from 5 million rubles a month or from 10 transactions of more than 100,000 rubles each. This week, the head of the Central Bank’s financial monitoring and currency control service, Bogdan Shablya, said that banks will soon receive even stricter instructions for verifying the source of this money.
By the end of September, the banking system had reached a liquidity shortage not seen since the first months of the war: banks borrowed more than 7 trillion rubles from the Central Bank and through other mechanisms. In addition to weekly repo operations, the Central Bank was forced to launch one-day “fine-tuning” auctions, and economist Igor Lipsits believes that banks have found themselves in a situation with no way out, since in addition to the outflow of deposits they still face the problem of bad borrowers.
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