Alexey Vedev: “In 2024 sharp growth in cash on hands of the population is not expected in Russia”

The Russians’ demand for cash funds has picked up quite unexpectedly and the latest banking statistics proves it. The average sum of cash withdrawals from ATMs increased by 25% and amounted to Rb35,000; by contrast, it was equal to Rb28,000 a year ago. Though growth dynamics can hardly be called explosive, it proves the fact that lots of people still prefer cash.

Unlike the situation with cash withdrawals, the average sum of depositing funds over a year has not virtually changed and is equal to Rb11,900 against Rb11,300. According to the banking statistics, the Russians replenish more often their accounts via ATMs, rather than withdraw cash: depositing of funds accounts for 76% of all operations, while cash withdrawals, for 24%. However, it is noteworthy that it is the number of operations that is meant here and not the physical volume of cash funds transacted via ATMs.

According to the Central Bank’s representatives, based on the results of 2023, the Russians have nearly Rb18 trillion of cash funds on hands, an increase of 10% (Rb1.9 trillion) as compared with 2022. However, individuals still find cash attractive and safe as a saving instrument.

Will this trend consolidate in future? It is highly unlikely that the volume of cash will explicitly grow in 2024 because so far there are no reasons for it, Dr. Vedev said. In his view, the inflation rate has stabilized at the average level and is trending downward. Neither devaluation of the Russian ruble, nor problems (technical or other) related with settlements on plastic cards are expected. Over the past few years, a dramatic surge in consumer interest in cash was registered only in April-May 2020 at the very outbreak of the pandemic when people massively closed their bank deposits. At that time, it was a real threat to the sustainability of the banking sector and financial markets which were deprived of liquidity and badly-needed cash reserves. The situation is absolutely different today.