Russians are pulling cash out of banks. How likely is the deposit freeze they fear?

Russians are rattled by a new wave of rumors about a possible freeze on bank deposits. Last week, The Washington Post reported on that risk. The paper linked the scenario to the growing volume of cash in circulation.

Russians have, in fact, been withdrawing money from banks and stashing their savings under the mattress since the fall of 2024. But the outflow became especially heavy in 2026. Since the start of the year, the amount of cash in circulation has grown by more than 10%, or 2.8 trillion rubles, and by the end of 2026 the increase could reach 3.8 trillion, Sber Chief Financial Officer Taras Skvortsov told the Russian business outlet RBC. For comparison, that’s more than half of Moscow’s budget for this year. Skvortsov went so far as to call July the worst month for banks in terms of outflows in the past six years.

The current pace of growth in cash holdings resembles the rate at which Russians pulled money out after the start of the full-scale war and the mobilization announcement in 2022. This time, though, it’s happening amid deepening economic problems and a fresh wave of rumors about a deposit freeze.

The problems are mounting, but the situation is still far from catastrophic. We’ll get to the deposit-freeze scenario below. For now, it’s worth saying plainly that the cash outflow is creating a more visible and more pressing problem for banks: since the start of 2026, their shortage of available funds, or liquidity, has more than quadrupled, from 0.6 trillion rubles to 2.6 trillion.

Every commercial bank holds an account at the Central Bank. The money in that account is liquidity. Banks use it to settle payments with one another. These are the settlement funds of the entire banking system, not the profit or capital of any individual bank.

When customers withdraw cash, rubles physically leave the banking system, and liquidity falls. The reverse happens when someone puts money into an account or a deposit: liquidity rises, analysts at Alfa Bank explained.

The growth in cash is above all a sign that more economic activity is going underground. The liquidity outflow, in theory, means banks have less capacity to issue loans and buy government debt — which matters a great deal to the authorities as the budget deficit grows.

“The state has to keep issuing debt. And the fewer rubles there are in the banking system, the less debt banks can buy,” Alexander Kolyandr, a senior fellow at the Center for European Policy Analysis, told Meduza.

Economist Yevgeny Nadorshin told the BBC Russian Service that when the volume of cash grows, the amount of money available in the economy can shrink. Apart from its share capital, a bank has no money of its own: it manages depositors’ funds and lends against those resources. Fewer deposits mean less capacity to lend:

Sber’s Skvortsov also told RBC that, from the perspective of Russia’s largest bank, the growth in cash amounts to “one million mortgage loans that we, as a system, will not issue.” “A million families won’t get a mortgage,” he said.

It’s probably better to steer clear of drastic decisions.

Russian banks remain relatively resilient. They cover their liquidity shortfalls through transactions with the Central Bank. And while the liquidity deficit has reached 2.6 trillion rubles, 68.6 trillion still sits in deposits. Add to that the fact that 58% of Russians have no savings at all.

The liquidity situation in the banking sector can develop in different ways, but it doesn’t disrupt banks’ day-to-day operations, the Central Bank has said. Russia went years with such a deficit while the banking sector kept growing. From 2012 through 2017, for example, banks operated under an even tighter liquidity shortage.

According to Alfa Bank analysts, what should worry observers isn’t the cash leaving banks itself, but how fast the outflow is growing and how long it lasts. What deserves watching is less the size of the deficit than the trajectory of the cash outflow. If it dies down, the situation may begin to normalize, Alfa said.

Even with cash’s share rising quickly, that share remains near historic lows, the Central Bank has said.

The current deficit falls within the Central Bank’s 2026 forecast of 2.4 trillion to 3.6 trillion rubles. Economist Yevgeny Nadorshin said the figure could rise by trillions more, and the banking system would still cope.

Of course there is. If the war doesn’t end soon — and there’s no sign of that yet — the economy’s problems will only mount. Russians’ standard of living will therefore fall slowly but steadily. That process, though, could go on for a long time, former Bank of Russia Deputy Chairman Oleg Vyugin said.

As Central Bank analysts wrote back in 2022, one scenario has Russia facing “reverse industrialization.” And in 2025, the regulator said the war had reduced the economy’s room for growth.

Unlikely.

Tatiana Mikhailova, a visiting assistant professor of economics at Pennsylvania State University, told the BBC Russian Service that although such fears exist, the risk remains low. There has been no genuine bank run, and for now the authorities are patching budget problems by pumping more money into the economy. That fuels inflation, but it doesn’t produce the social upheaval and collapse of trust in the banking system that a deposit freeze would.

The economists Kolyandr and Nadorshin share that view. Oleg Buklemishev, an associate professor of economics at Lomonosov Moscow State University, said the same back in 2025.

Central Bank Deputy Chairman Alexey Zabotkin went further in July 2026, saying a deposit freeze was impossible “under any scenario,” while Nikita Krichevsky, who holds a doctorate in economics, predicted that “there will be no freezing of deposits — that is a firm decision by the Guarantor [Vladimir Putin — Meduza] … and there’s no swap of deposits for bonds in the works either.” Vyugin called the idea of freezing deposits “useless.”

If catastrophe were bearing down, deposit rates would be spiking — or the authorities would be restricting currency exchange and taking other steps to keep money in the banking system, Kolyandr said.