Sberbank Reports Ruble Shortage Due to Mass Cash Withdrawals

On the Russian interbank market, there is a shortage of ruble liquidity due to a record outflow of cash. In July, the amount of cash in circulation increased by 600 billion rubles, marking a historical high for this month. Since the beginning of the year, approximately 2 trillion rubles have been withdrawn from the Russian banking system in cash. The main factors driving this trend include increased taxes, which force small businesses to adapt to new rates and switch to cash transactions, as well as statements from politicians about a possible freeze or seizure of deposits, prompting the public to withdraw money from banks. Due to mass withdrawals, interest rates in the interbank market have risen above the key rate of the Central Bank of Russia. In July, the structural liquidity deficit of the banking sector reached 2.4 trillion rubles, the highest level since March 2022. To support systemic liquidity, the regulator increased the volume of bank lending, and the debt to the Central Bank in mid-month amounted to 7.4 trillion rubles.

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