The figure was up by more than $40 billion in July year-on-year, according to the central bank
The volume of cash in circulation in Russia amounted to 17.8 trillion rubles ($198 billion) as of July 1, 2023, up by more than 9% since the beginning of the year, according to data released by the central bank last week.
The figure is $42 billion higher than the same month of 2022, and represents an all-time record since statistics became publicly available.
The central bank earlier said the “elevated demand” for cash was partly due to the additional need for paper money in Russia’s new regions, where all settlements switched to ruble banknotes from January. The Russian ruble has become the official currency of the Donetsk and Lugansk People’s Republics, as well as the Kherson and Zaporozhye Regions, former Ukrainian territories that voted to join Russia in referendums last year.
The central bank also cited the role of public-sector payments that people tend to withdraw partly in cash, and the needs of tourists visiting Russia.
A report by Bloomberg last month suggested that the surge in cash circulation in Russia could indicate a decrease in confidence in local banks, worsening tax compliance, and a growing share of the shadow economy. The outlet also linked the increase in cash use with payments made to the Wagner private military company, which until recently played a prominent role in the Ukraine conflict.
After a mutiny in June, Wagner members were offered the opportunity to retire, sign contracts with the Russian military, or relocate to Belarus together with the group’s founder, Evgeny Prigozhin.
Analysts have also attributed the growing cash circulation in Russia to the financing of the four new regions, inflation, and the population’s transition to a savings model of behavior, preferring to store cash at home.
In addition, demand for the national currency has increased throughout the country on the back of the rising dollar and euro exchange rates, experts say.
The share of the US dollar and euro in Russia’s settlements slumped from 90% in early 2022 to less than 50% by the end of the year, and will keep falling, Russian Deputy Minister of Economic Development Vladimir Ilyichev told RT last month. Depending on various scenarios, the Russian Finance Ministry expects the share of the greenback and euro to diminish to 10-15% by the end of the year, the deputy minister revealed.
