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Cash outflow amid drone fear
Russians have been pulling billions from the country’s banking system as Ukrainian drone attacks intensify and fear grows that the Kremlin will seize deposits for the war.
“Nearly $3.4 billion (286.4 billion rubles) was withdrawn in the first two weeks of August”
The Washington Post reports that “Nearly $3.4 billion (286.4 billion rubles) was withdrawn in the first two weeks of August,” citing Taras Skvortsov, a senior executive at Sberbank, Russia’s biggest retail financial institution.
A separate report in streamlinefeed.co.ke says Russian citizens withdrew “USD 3.4 billion (KES 442 billion) in just two weeks,” describing the withdrawals as sparking a liquidity crisis that threatens the Kremlin’s war financing.
The Washington Post links the cash drain to a banking sector already strained by “increasing levels of bad debts” following a government-directed lending boom to ramp up military output.
Officials and analysts cite fear
Taras Skvortsov told RBK Radio that “Each month there is a big outflow,” warning that “If the trend continues things are not going to get better.”
A former finance official, speaking on the condition of anonymity, said “Drones are flying. Things are burning down. Nervousness is growing,” adding that people’s “everyday wisdom may be kicking in” to keep cash “under their pillow.”
Alexandra Prokopenko, a former adviser to the Russian Central Bank, said the withdrawals reflect “deepening fear among the Russian public,” arguing that it means “people have no trust in the Russian banking system.”
Prokopenko also said she believed nationalization was unlikely but added, “I would not exclude that the authorities could impose limits on withdrawals.”
Kremlin finance strain and fallout
The Washington Post says the total siphoned out this year already exceeds the $24.7 billion (2 trillion rubles) removed in the first year after the February 2022 invasion, and it notes that in the first two weeks of the invasion $23 billion fled the system.
“was forced to cancel planned bond issues”
It reports that the Finance Ministry “was forced to cancel planned bond issues,” even as it has become more dependent on them to fill a yawning budget deficit while military spending continues to grow.
The article also ties the strain to government orders to ramp up lending to the defense sector, saying Russian banks “appear to have so much exposure to nonviable borrowers” that they are “not certain how it’s going to get restructured.”
In a sign of Kremlin sensitivity, the chief economist at VEB, Andrei Klepach, was fired after commenting that Russia could not win a war of attrition against Ukraine while Kyiv is supported by the West, and he said, “We won’t win the competition in this war of attrition.”