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Cash returns amid drone attacks
Ukrainian drone attacks on Russian territory have helped trigger a return to cash, as mobile internet shutdowns ordered by the Kremlin disrupt card payments across large swathes of the country.
“Russia has added 1.56tn roubles (£14.8bn; $20bn) in cash into circulation since the start of the year”
The BBC, analyzing Central Bank figures, said Russia added "1.56tn roubles" in cash into circulation since the start of the year, describing it as the biggest rise for the equivalent period in any year outside the Covid-19 pandemic.
The BBC linked the spike to a wave of Ukrainian drone attacks that repeatedly led the Kremlin to shut down mobile internet, leaving many unable to pay by card.
In Moscow, one woman told the BBC on condition of anonymity that "Having cash on hand gives you some sense of control and security" during emergencies when the mobile network goes down.
Tax pressure and grey schemes
The BBC said the shift to cash is making it harder for the state to collect tax as Russia faces a widening budget deficit while needing every rouble it can raise to fund the war in Ukraine.
It reported that to boost revenues the Kremlin hiked VAT from 20% to 22% in January and lowered the threshold at which small and medium-sized businesses have to pay it, pushing firms toward cash to keep more income off the books.
Taras Skvortsov, chief financial officer of Sberbank, warned in comments cited by Interfax that there were "very serious signs" that more businesses were paying wages "in envelopes" under the table.
The BBC also said a May survey by Opora Russia found about 6% of entrepreneurs had turned to "grey schemes" to cope with the new tax burden, including avoiding cash-register receipts.
War economy strain and UN tally
Beyond cash and tax, the Moscow Times described Russia’s wartime borrowing boom as leaving the banking sector increasingly vulnerable as high interest rates and slowing growth make it harder for companies and households to repay their debts.
“Russian corporate debt has grown by 93% since 2021, while household debt has risen by 57%”
It said Russian corporate debt has grown by 93% since 2021 and household debt has risen by 57% over the same period, while a record 636,000 Russians declared bankruptcy in 2025, up 30% from the previous year.
The UN’s war-in-Ukraine page, meanwhile, said the Russian invasion that began on February 24, 2022 has killed thousands of civilians and destroyed vital infrastructure, and it tallied more than 43,600 civilian casualties and more than 12,900 deaths.
It also warned that "The war in Ukraine is today more deadly than at any other moment" since the launch of the large-scale invasion, quoting the UN Deputy Secretary-General for Political Affairs at a Security Council meeting.
