Russian citizens and companies are massively withdrawing cash from bank accounts

Dusseldorf. Russian citizens and companies are withdrawing billions from their bank accounts out of fear that the Kremlin could confiscate deposits to finance war. The Washington Post (WP) reports this, citing data from the Russian Central Bank and high-ranking financial officials.

In the first two weeks of August alone, 286.4 billion rubles were withdrawn, in July around 630 billion rubles and in June more than 390 billion rubles. According to the Washington Post, this year's total outflows could exceed those of the first year of the invasion in 2022 - the equivalent of $24.7 billion - for the first time.

The withdrawals are causing liquidity problems at banks and undermining the Kremlin's ability to issue government bonds to finance war, according to the report. The Ministry of Finance has already been forced to cancel planned emissions. In the bond market, interest rates for ten-year government bonds have risen to 17 percent.

"Drones are flying. Things are burning down. Nervousness is growing. And people's everyday wisdom is taking hold that they have to have cash under their pillow and not somewhere in banks where it may never come back," a former senior Russian financial official told the WP. The report does not name any names. "This is really a problem for some banks. They didn't expect this and invested all the money elsewhere - and yet people come and withdraw half a trillion rubles a month."