Russians Turn to Cash, Wracking WWII‑Driven Economy


With mobile internet cuts and rising taxes, Russians are withdrawing billions of roubles from bank accounts, moving to cash in a move that threatens the state’s tax base and the country’s already shaky economy.


Woman in Moscow accessing cash near Central Bank

The central bank reports that 1.56 trillion roubles—roughly £14.8 bn or $20 bn—have entered circulation since the start of the year, the largest jump outside any pandemic era. The figure is driven by Ukrainian drone attacks that have prompted the Kremlin to shut down mobile networks across large regions, making card payments unreliable.


"Having cash on hand gives you some sense of control and security," a Moscow resident explained, highlighting how people can still purchase basic supplies even when networks go offline.


The shift to cash also makes it harder for the state to collect VAT and income taxes, exacerbating an already widening budget deficit that funds the ongoing conflict in Ukraine.


Since President Vladimir Putin announced partial mobilisation in September 2022, and after the Wagner mercenary mutiny in June 2023, cash withdrawals have surged again. Meanwhile, many small–medium enterprises are steering customers toward cash to keep more money out of the banking system under new tax rules. A May survey by the Opora Russia SME association found 6% of entrepreneurs admitting to using “grey schemes” to evade tax.


The Kremlin has raised VAT from 20% to 22% and lowered the threshold for businesses that must pay, pressuring even modest outfits. Yet the Soviet‑era instinct to keep money “under the mattress” is resurging, even though bank deposits yield double‑digit returns and the central bank keeps interest rates high to counter war‑fuelled inflation.


In May alone, Russians withdrew 550 bn roubles from bank accounts, including 200 bn roubles from fixed‑term deposits that currently offer 10% interest at Sberbank, Russia’s largest lender. "It is staying in people’s hands," warned Sberbank CFO Taras Skvortsov, noting a lack of cash returning to banking channels.


Consumers report discounts for cash purchases and are forced to find ATMs that still dispense money during subsequent shutdowns. The trend underscores a widening strain on an economy already under pressure from rising oil prices, yet struggling with zero‑growth forecasts for 2026 and a steep battle for fiscal stability.