The Russians Love their Banknotes Too
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“In Europe and America
There’s a growing feeling of hysteria”
Sting, Russians, 1985
An increase of 1 trillion rubles
According to Bloomberg, cashMoney in physical form such as banknotes and coins. More demand has been soaring in Russia. Approximately 1 trillion rubles ($13.6 billion) have been withdrawn from ATMs and bank branches since the beginning of March, more than during the whole of last year, central bank data show. There were 11.2 trillion rubles in circulation on 1 April 2020, according to the Bank of Russia.
Russia is one of the few countries that had seen cash in circulationThe value (or number of units) of the banknotes and coins in circulation within an economy. Cash in circulation is included in the M1 monetary aggregate and comprises only the banknotes and coins in circulation outside the Monetary Financial Institutions (MFI), as stated in the consolidated balance sheet of the MFIs, which means that the cash issued and held by the MFIs has been subtracted (“cash reserves”). Cash in circulation does not include the balance of the central bank’s own banknot... More decline in relation to GDP, over the past decade, according to data from the Bank for International settlements.
Source: Bank for International Settlements
According to Bloomberg, daily spikes in demand coincided with Russian President Vladimir Putin’s televised briefings announcing measures to stop the spread of the coronavirus in the country. One instance was when Putin announced a tax on bank deposits exceeding 1 million rubles and when he extended confinement measures until May.
Encouraging Consumers to use digital payments
Reuters reported on March 24 that consumer safety watchdog Rospotrebnadzor had encouraged consumers to move to digital payments, citing World Health Organization comments stating that cash could pose a risk of spreading the virus.
The World Health Organisation has since denied the statement and many central banks have indicated that banknotes are safe to use. Bundesbank Executive Board member Johannes Beermann has indicated that the risk of picking up coronavirus via cash is extremely minimal. “The probability of becoming ill from handling cash is smaller than from many other objects used in everyday life. Banknotes and coins do not pose a particular risk of infection for the public.” he said.
According to Reuters, the central bank quarantines banknotes for up to 14 days before distributing them and is asking retail banks to do the same, said Vladimir Demidenko, deputy head of its cash circulation department. Retail banks have also been asked to limit the refilling of ATMs that recycle notes and to disinfect terminals regularly. The limits do not apply to ATMs that do not recycle notes and are replenished by the banks.
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