Russians are massively switching to cash due to the war, internet outages, and tax increases
Kyiv • UNN
Since the beginning of the year, 1.56 trillion rubles in cash have been put into circulation. The reasons were mobile internet outages and tax increases.
In Russia, the use of cash has sharply increased due to regular mobile internet outages, increased tax burden, and economic slowdown amid the war against Ukraine. This is reported by the BBC, citing data from the Central Bank of the Russian Federation, writes UNN.
Details
According to the publication, since the beginning of the year, 1.56 trillion rubles in cash have been put into circulation – this is the largest increase for the corresponding period among all years, except for the COVID-19 pandemic.
One of the reasons is the regular shutdown of mobile internet after attacks by Ukrainian drones, causing non-cash payments to stop working in many regions. In addition, more and more businesses are switching to cash payments, trying to reduce the tax burden.
Having cash on hand gives a sense of control and security. If an emergency happens in the city, I will still be able to buy the essentials
Business is increasingly operating "in the shadows"
In May, the Russian Ministry of Economy lowered its GDP growth forecast for 2026 to 0.4%. At the same time, since January, the authorities have increased the VAT rate from 20% to 22% and expanded the range of enterprises that must pay it.
According to the BBC, pharmacies, restaurants, beauty salons, and small shops are increasingly asking customers to pay in cash in order to hide part of their income and stay below the tax threshold.
The financial director of Sberbank, Taras Skvortsov, stated that more and more companies are paying salaries "in envelopes," and cash is not returning to the banking system.
A survey by the Association of Small and Medium Businesses "Support of Russia" showed that about 6% of entrepreneurs already use "gray schemes," in particular, hiding part of their revenue or not issuing cash receipts.
According to the Central Bank of the Russian Federation, in May alone, Russians withdrew 550 billion rubles from bank accounts, of which 200 billion rubles were from time deposits, despite high deposit rates.