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The Russians Love their Banknotes Too

Categories : Cash is a contingency and fall-back solution, Cash is also a store of value
April 24, 2020
Tags : ATM, Central Bank, Coronavirus, Demand, Russia
Cash demand is soaring in Russia. The country joins Argentina, Australia, the Euro area and the US, which have also seen a sharp rise in cash in circulation.
Guillaume Lepecq

This post is also available in: Spanish

“In Europe and America
There’s a growing feeling of hysteria”

Sting, Russians, 1985

An increase of 1 trillion rubles

According to Bloomberg, cash 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 Approximately 1 trillion rubles ($13.6 billion) have been withdrawn from ATMs and bank branches since the beginning of March, more than during the whole of last year, central bank data show.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 circulation 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.

Many other economies have seen cash demand increase over the past month including, Argentina, Australia, the Euro area and the US.

This post is also available in: Spanish