Russians tried non-cash: what will happen next with the money in their wallets
During the first half of the year, the volume of cash in the wallets of compatriots decreased by 570 billion rubles. This conclusion can be drawn from the statistics of the Central Bank. A larger return of money into the banking system was observed only in 2015, when the volume of cash decreased by 1.2 trillion rubles. Further, the flow of money from cash to non-cash form was observed three times, but each time it was much more modest than the presented figures. MK found out from experts how the new record will affect the lives of Russians and the domestic economy.
In times of crisis, the population usually has more money in their hands. For example, this was the case during the pandemic and after the start of the SVO. However, as a number of analysts point out, to date, the share of cash in the total money supply is at a historical minimum — 16.1%, and this is not the limit. This trend may continue for the next six months.
According to Freedom Finance Global leading analyst Natalya Milchakova, for the Russian economy, the reduction in cash in the hands of the population — this is a blessing. Firstly, because interest rates are high this year, and if people take money to banks for deposits, this means that the monetary policy of the Central Bank of the Russian Federation is at least working, and this will further reduce the money supply in circulation and help slow down inflation. Secondly, if people brought 570 billion rubles to banks, and this amount is equal to approximately 0.3% of Russian GDP, then they have something to put in the bank. That is, the population’s income has increased so much that many can afford to put a fairly good amount into a bank account. Thirdly, this suggests that fintech services are rapidly developing in Russia, and the banking business is increasingly moving into mobile applications and Internet banking. Also, the opportunity for Russians to transfer up to 30 million rubles per month from one bank to another without commission, which appeared on May 1 of this year, contributed to a significant influx of cash into banks, since managing your money in non-cash form online is much easier than in cash, the economist emphasized .
Conclusions about the positive impact of digitalization in the financial sector on the volume of non-cash funds can be reached by studying public opinion. As a survey by Anderida Financial Group (AFG) showed, 70% of Russians have stopped carrying cash with them all the time. Over the past four years, the share of Russians who prefer non-cash payment methods has more than doubled. Of those who still use cash, every third person takes with them no more than 3 thousand rubles. Every fourth citizen (25%) carries with him from 500 rubles to 1000 rubles in his wallet. For comparison, in 2020 there were 11% more such people.
In general, all this also testifies to the high level of trust that Russians have in the banking system. «GDP is growing, the impact of sanctions on the economy is small, which again confirms the increase in trust in banks, among other things,» says investment adviser Yulia Kuznetsova.
The reduction in the amount of cash among the population can be seen as a positive sign for the economy. «Investing money in banks allows them to increase the amount of available credit resources, which stimulates economic growth,» continues Alexander Shneiderman, head of the customer support and sales department at Alfa-Forex. This helps stabilize the financial sector.
In addition, we can also talk about the growth of financial literacy and a tendency towards long-term planning among Russians. Some Russians are already calmly converting rubles into cryptocurrency, which is also reflected in the reduction of cash in circulation. All this will lead to the fact that the regulator may no longer see the previous values of cash in the hands of the population. “A decrease in the share of cash may also take place in the event of their exit to the financial market in foreign currency or cryptocurrency,” says Oksana Stepannikova, associate professor of the RUDN University Faculty of Economics. “The reduction in the share of cash by almost 600 billion rubles is precisely associated with these trends. It will increase as the financial literacy of the population grows and the economy digitalizes, so we may no longer see the previous values of the share of cash in circulation.” The reduction of cash in hand also has a positive effect on the citizens themselves, as this helps reduce the risks associated with their storage. The speed of money turnover is decreasing, the monetization coefficient is growing, which contributes to the strengthening of the national currency, the economist noted.
However, there are also alarming details in the published statistics. «With such high interest rates, the decrease in ruble cash is predictable, but the decrease in foreign currency in the hands of citizens, and its decrease amounted to 197.4 billion rubles, may indicate an outflow of capital abroad,» Svetlana Frumina, head of the Department of World Financial Markets and Fintech at the Plekhanov Russian University of Economics, points out.
If there is another increase in rates, most likely, the amount of cash rubles in the hands of Russians will continue to decrease and the money will be redistributed to the banking sector, that is, the size of deposits in the next six months will increase again. As noted by BitRiver Communications Director and economist Andrey Loboda, a reduction in the volume of cash could lead to a restriction of consumption, which is also a positive factor that can limit the growth of inflation.