Russian citizens have reportedly begun pulling money from banks amid fears that President Vladimir Putin will raid their savings to fund the war against Ukraine. During the first two weeks of August, the volume of cash in circulation in Russia rose by 286.4 billion roubles, equivalent to £2.5 billion, according to central bank data.
Record Cash Outflows in August
Russian banks have been bleeding cash each day, with the highest outflow of 56.8 billion roubles (£491.9 million) recorded on August 12. The month before saw a record outflow, with more than 620 billion roubles (£5.4 billion) withdrawn from the banking system. For seven consecutive months, money has been flooding out of the banks, attributed to ongoing instability.
Analysts suggested that economic pessimism and fears that the Kremlin could freeze deposits or impose a cap on withdrawals are driving the trend. Rumours spread across Russian Telegram channels about a potential freeze, but Anton Siluanov, the Russian minister of finance, branded the posts as 'fake news' in a statement.
Impact on Banking Liquidity and Corporate Moves
The cash demand has reportedly drained banks' rouble liquidity, resulting in the Central Bank of Russia expanding lending in the banking sector. It is not just citizens who are moving money; large companies are said to be transferring funds abroad to avoid any potential seizures.
This development comes hours after Moscow slammed Britain for supplying drones for long-range strikes inside Russia, warning that this makes the UK a participant in the war. Vladimir Putin's Foreign Minister Sergei Lavrov lashed out as Prime Minister Andy Burnham stressed that he is 100% behind Ukraine 'against this illegal war led by Vladimir Putin.' Burnham added: 'Britain is providing support so that Ukraine can defend itself, and that's been the British position all the way through this conflict by previous prime ministers, it remains the case with me. We are not fairweather friends.'
Geopolitical Tensions and Domestic Strikes
Foreign Minister Lavrov spoke to Russian television and said: 'This only means one thing. The president [Putin] warned of our right to act in any part of the oceans if someone encroaches on our interests, on our property. We have the same right to view the proudly declared direct participation of British missile forces in strikes against Russia as participation in a war, with all the ensuing consequences.'
Russians are becoming increasingly concerned over the new deep reach of drones and missiles deployed by Ukraine to target strategic targets deep inside the country. Buildings were also hit today in other Russian cities – Tula, the location of multiple defence plants – and Ufa, a major oil capital. An oil refinery was hit in Ufa, sparking yet another fire as Russia grapples with critical petrol shortages and long queues. In Ukraine's Zaporizhzhia region, two people were killed and ten injured in a Russian guided aerial bomb attack on a residential area.
