Experts explained the benefits of cash: “Take it out from under the mattress and run.”
The popularity of five thousand ruble banknotes has soared in Russia. This trend was recorded by the Central Bank. According to Gosznak General Director Arkady Trachuk, the increase in demand is associated with the important role of such banknotes in the savings of Russians. But he did not specify whether Russians need banknotes of the highest denomination in order to carry them as deposits in banks or to store them under the mattress at home. Experts told MK why Russians prefer banknotes.
The growing popularity of 5,000 ruble banknotes is associated with their increasingly important role in the savings of Russians amid the transition to non-cash payments, said the general director of Goznak. “The nature of savings remains, and therefore the demand for banknotes of higher denominations is becoming higher,” noted Arkady Trachuk.
But this explanation is clearly not indisputable. After all, the whole world is increasingly switching to cashless payments. It is convenient, safe (from the point of view of all the bacilli that live on banknotes), profitable (interest on deposits is very attractive). In addition, high-denomination paper money has obvious disadvantages: firstly, stores often have no change for five thousand, and secondly, such money does not generate income and suffers from inflation.
The demand for five-thousandth banknotes has increased due to inflation, according to the majority of experts interviewed by MK. Prices for goods and services continue to rise, and the purchasing power of money falls. Just 5-7 years ago, 1000-1500 rubles in a grocery store could buy a significant range of products, but now it has decreased significantly. Citizens have to take a large amount of money with them to buy the same list, and in this regard, bills of five “mowers” are naturally in great demand.
“Non-cash payments prevail in countries with a stable economic environment, where the worst thing that can happen is inflation of 2.5-3% per year. But in Russia there has been no stability since the collapse of the Soviet Union: one crisis gave way to another, says Anna Kokoreva, an expert on the stock market at BCS World of Investments. “Sanctions and geopolitical tensions do not add confidence in the future, so many Russian citizens choose paper currency here and now.”
But why cash? There are also deposits with attractive interest rates. Or is paper in Russia still more reliable than plastic and a bank account? Banks may close or burst, currency may be banned, but in case of force majeure, cash is always with you, continues Kokoreva. You still need to withdraw money from the deposit, but, roughly speaking, take the cash out from under the mattress and use it. Naturally, it’s easier to store such a “stash” in large bills. “In general, if the demand for cash increases among the population, this is an alarming signal. The level of public confidence in the economy is declining, citizens are preparing not for good, but for something bad,” the expert concludes.
The head of the sales and customer support department at Alfa-Forex, Alexander Shneiderman, explained the increased demand for banknotes with a denomination of 5 thousand rubles for two reasons. Firstly, individuals increasingly prefer to keep money at home in the form of cash and do not trust non-cash payment methods, including against the backdrop of news about widespread cases of fraud. Five thousand dollar bills are convenient to store, including in secret places. Secondly, small businesses still prefer cash payments with other entrepreneurs, and here, too, bills of five “mowers” are the most popular.
“Probably due to the reluctance to pay commissions to banks for servicing transactions on a current account, the demand for this type of transaction support is growing. At the same time, it is almost impossible to track how much one company actually paid another in cash,” says MK’s interlocutor.
According to Ivan Samoilenko, managing partner of B&C Agency, the demand for cash is associated with an increase in social payments according to government programs that have been introduced recently. Cash is also needed for trips abroad, where in the current conditions it is not possible to pay with cards issued in Russia. “Also, many real estate agencies or car dealerships offer good discounts on the purchase of apartments or cars for cash. The cost of these objects is quite high. This explains the increased demand for the largest denomination of Bank of Russia notes,” he continues. “As for saving money in deposit accounts, many simply do not want to understand the banking system and prefer to keep their money, as they say, in a bank, but a glass one — for their own peace of mind.”