In a significant financial shift, Russians have withdrawn approximately €24.4 billion from banks in just the first seven months of this year. This trend is driven by fears that the Kremlin may seize private deposits to fund its ongoing war in Ukraine, particularly as Ukrainian drone strikes intensify and the economy falters. The demand for cash has surged since early March, with monthly withdrawals averaging around 300 billion roubles, indicating a deepening lack of trust in the banking system.
Five of Russia’s seven largest banks have reported substantial net outflows, with Gazprombank and Rosselkhozbank facing the most severe losses. The situation has prompted a notable increase in cash circulation, which rose by 643.4 billion roubles in July alone. This is the largest monthly increase observed this year, highlighting a growing trend of individuals opting for cash over bank deposits amid economic uncertainty.
The fear of government intervention is compounded by recent actions where the state has seized billions in private assets, raising alarms among depositors. As the Kremlin continues to extract funds from wealthy individuals, the financial landscape in Russia is becoming increasingly precarious, with many large companies also moving their assets abroad to escape domestic regulations.
This ongoing withdrawal trend reflects not only immediate financial concerns but also a broader erosion of confidence in the Russian economy. With GDP growth stagnating and public sentiment shifting, the implications for both the banking sector and the wider economy could be profound, potentially leading to long-term instability if the current trajectory continues.
Source: Euronews
