Russia has experienced a significant rise in cash circulation, with 1.56 trillion roubles added to the economy since the beginning of 2026. This increase marks the largest growth for a similar period outside of the Covid-19 pandemic, according to Central Bank data analyzed by the BBC.

The shift toward physical currency is driven by a combination of security measures and economic strain. Frequent mobile internet shutdowns, implemented by the Kremlin to mitigate the threat of Ukrainian drone strikes, have repeatedly disrupted digital card payments. For many citizens, holding cash has become a strategy for maintaining access to essential goods during these outages.

Simultaneously, the Russian government is struggling with a widening budget deficit and a slowing economy, with GDP growth forecasts for 2026 cut to 0.4%. To increase revenue, the state raised VAT from 20% to 22% in January and lowered the threshold for business tax obligations. These measures have placed significant pressure on small and medium-sized enterprises, leading many to encourage cash transactions to avoid reporting full turnover or to pay wages "under the table."

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Taras Skvortsov, CFO of Sberbank, noted that cash is failing to return to the banking system, describing the trend as a "very worrying moment." Data from Opora Russia, an association for small and medium-sized enterprises, indicates that approximately 6% of entrepreneurs have adopted "grey schemes" to manage the increased tax burden.

Experts suggest the government is facing a contradictory situation. While the Kremlin aims to maximize tax collection to fund the war, its security policies—specifically the internet blackouts—are inadvertently hindering the digital infrastructure required to track and collect those very taxes. Despite high interest rates on bank deposits, many Russians continue to withdraw funds, reflecting a growing preference for liquidity and financial autonomy.

Source: BBC News