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Government-engineered internet shutdowns paralysing internet-dependent trade and payments in Russia have encouraged citizens to withdraw and hold more cash.
Additionally the Russian banks are taking extraordinary steps to delay withdrawals from bank accounts in the form of specious anti-fraud checks requiring account holders to 'prove' the funds in their accounts were obtained legally.
Rational consumers will typically deposit funds with banks to earn interest on funds that are not needed for immediate living expenses and purchases. Unfortunately for the banks many savers are choosing to forgo interest on deposits due to the problems involved in withdrawing their funds. Additionally there will be some depositors who fear that the government may take moves to freeze withdrawal of funds from their accounts and will withdraw funds to avoid this possibility.
www.bbc.co.uk
A change in sentiment regarding holding funds in banks is unlikely to precipitate a sudden 'run on the banks' but is likely to steadily reduce the amount deposited in banks, reducing the funds banks can lend to Russia's MIC. Good news for Ukraine!
Already unable to fund the war through receipts, the government may be forced to impose increasingly draconian measures in its quest to find extra funds.
Additionally the Russian banks are taking extraordinary steps to delay withdrawals from bank accounts in the form of specious anti-fraud checks requiring account holders to 'prove' the funds in their accounts were obtained legally.
Rational consumers will typically deposit funds with banks to earn interest on funds that are not needed for immediate living expenses and purchases. Unfortunately for the banks many savers are choosing to forgo interest on deposits due to the problems involved in withdrawing their funds. Additionally there will be some depositors who fear that the government may take moves to freeze withdrawal of funds from their accounts and will withdraw funds to avoid this possibility.
Russians turn to cash putting more strain on slowing wartime economy
Russians have been hit by mobile internet shutdowns and more businesses are seeking to dodge tax after more than four years of war with Ukraine.
www.bbc.co.uk
A change in sentiment regarding holding funds in banks is unlikely to precipitate a sudden 'run on the banks' but is likely to steadily reduce the amount deposited in banks, reducing the funds banks can lend to Russia's MIC. Good news for Ukraine!
Already unable to fund the war through receipts, the government may be forced to impose increasingly draconian measures in its quest to find extra funds.
