Russia Sees Massive Cash Surge Amid Internet Blackouts

Russian citizens are increasingly returning to cash payments, with 1.56 trillion roubles added to circulation since the beginning of 2026. This surge represents the largest increase in cash usage outside of the pandemic era. The shift is primarily driven by the Federal Government of Russia, which implemented mobile internet shutdowns to counter Ukrainian drone attacks, inadvertently disrupting card payments and blocking access to digital funds.

Economic pressures are further accelerating the trend. Small and medium-sized businesses are steering customers toward cash to evade a January value-added tax increase from 20% to 22% and to hide income from tax authorities. Opora Russia reported that 6% of entrepreneurs have adopted grey schemes to cope with these taxes, while Sberbank has observed significant withdrawals from bank accounts and fixed-term deposits.

These developments undermine the Kremlin's efforts to manage a widening budget deficit and fund its military operations in Ukraine. The economic instability is reflected in a lowered 2026 GDP growth forecast of 0.4%. In response to the trend of under-the-table payments, Vladimir Putin called for a radical reduction in illegal employment, while Sberbank leadership warned of serious signs that businesses are paying wages in envelopes.