Bank addresses speculations regarding potential restriction on accessing cash funds
The Bank of Russia, Russia's central bank, values public trust in the country's financial institutions and sees bank deposit stability as a key factor in maintaining this trust. Alexei Zabotkin, the Deputy Chairman of the Bank of Russia, recently stated that a cash withdrawal ban from deposit accounts is impossible, citing devastating consequences for the country's financial system and economy.
Zabotkin's statement comes in response to rumors about possible restrictions on cash withdrawals from deposits that had been circulating on social media. Such a move, he explained, would undermine trust in financial institutions, possibly triggering bank runs or widespread financial panic.
Cash is still an essential medium for daily transactions in Russia, particularly with the recent resurgence in cash demand driven by internet blackouts, which have forced people and businesses to rely on cash more heavily as electronic payments become less accessible. A ban on cash withdrawals would likely cause systemic risks, harming liquidity in banks and possibly leading to capital flight or increased use of informal financial channels.
Moreover, while Russia faces expanding international sanctions targeting banks and financial flows, cutting off cash withdrawals internally would not mitigate these pressures but compound economic hardship. The Bank of Russia has not announced any plans or measures regarding restrictions on cash withdrawals from deposits.
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In summary, the Central Bank of Russia explicitly rejects the idea of a cash withdrawal ban, emphasizing that such a measure would have catastrophic effects on economic stability and financial system functioning. The current environment of sanctions and operational difficulties (like internet outages) enhances the importance of cash liquidity, making withdrawal restrictions particularly harmful.
The rejection of a cash withdrawal ban by the Bank of Russia, coupled with the potential catastrophic effects on economic stability and financial system functioning, highlights the significant role that cash plays in Russian business and finance. Any measures aiming to limit cash withdrawals could potentially instigate political instability, as the general public relies on cash for daily transactions, especially during times of internet blackouts and heightened international sanctions.
