In May, Russia recorded its highest outflow of cash from banks in 30 years
The Russian banking system continues to see an increase in the volume of cash in circulation. According to the Central Bank of Russia, this figure rose by a further 381.2 billion roubles in May, setting a record for May since records began, reports The Moscow Times.
In April, the volume of cash in the economy rose by 678.7 billion roubles, and in March by 301.1 billion. Overall, since the start of the year, the amount of banknotes in circulation has increased by 1.09 trillion roubles. The last time such figures were recorded was during the pandemic, when, in the first five months of the year, the public and businesses withdrew 1.39 trillion roubles in cash from the banking system.
Natalia Milchakova, an analyst at Freedom Finance Global, attributes the rise in demand for cash to geopolitical and macroeconomic uncertainty. According to her, people want to have funds for unforeseen expenses directly to hand.
Among other reasons, she cited internet outages, which make it difficult to use online banking and cashless payments, as well as the reduction in the Central Bank of Russia’s key rate, which makes bank deposits less attractive.
According to the expert, the increased interest in cash may also indicate that some small and medium-sized businesses are moving into the shadow economy.
A similar trend had previously been noted at Sberbank. The bank’s first deputy chairman, Alexander Vedyakhin, stated that the demand for cash is partly linked to public concerns regarding the monitoring of financial transactions and the potential tax implications of transfers between individuals.
From 1 June, the Central Bank of Russia has tightened controls on cash withdrawals via ATMs. Banks are required to monitor withdrawal limits, and suspicious transactions may be temporarily suspended. This applies, in particular, to large sums following long intervals or numerous transactions within a short period of time.
In addition, the regulator has instructed banks to tighten controls on cash deposits. If, within 30 days, a customer deposits 5 million roubles or carries out at least ten transactions of 100,000 roubles each, financial institutions must request confirmation of the funds’ origin. Particular attention should be paid to cases where the majority of the deposited funds are transferred abroad within ten days.
