Russians have withdrawn about €24.4 billion from banks in the first seven months of 2023. This is due to fears that the Kremlin might seize private savings to fund the ongoing war in Ukraine. The trend has worsened as Ukrainian drone strikes hit Russian oil refineries and logistics, increasing economic instability.
Key Details
The Bank of Russia reports that cash withdrawals have surged. Around 300 billion roubles (€3.05 billion) have left accounts each month. In early August, nearly 286.4 billion roubles (about $3.4 billion) were withdrawn in just two weeks. Five of Russia's largest banks have reported major outflows. Gazprombank lost 299.5 billion roubles (€3.04 billion), while Rosselkhozbank saw a drop of 270.5 billion roubles (€2.75 billion).
Alexandra Prokopenko, a former adviser to the Russian Central Bank, said these withdrawals show a deep fear among the public about the banking system's stability. She stated, "It means people have no trust in the Russian banking system or in the Russian financial system." The total cash in circulation rose by 643.4 billion roubles (€6.53 billion) in July, the largest monthly increase this year.
Background
The ongoing conflict and the threat of government action have led to a rising demand for cash. Many Russians are choosing to withdraw their savings to avoid potential losses.
The large outflows from Russian banks could cause more volatility in the financial sector. This may particularly affect banking stocks and the rouble. Investors might be wary about the stability of the Russian economy as fears of government intervention grow. Watch for further developments on the Kremlin's financial policies and the effects of ongoing military actions in Ukraine.
Based on reporting by: euronews.com, independent.co.uk