According to the Central Bank, in November the reduction in the amount of cash in the hands of Russians amounted to 318.2 billion rubles, more than doubling. A month earlier, the change reached 150.7 billion, in September, 27.9 billion, regulator statistics show. The growth in the volume of cash in circulation gave way to a decline just after the tightening of the Central Bank’s monetary policy began. A sharp increase in the key rate increased the attractiveness of deposits, which intensified the saving behavior of citizens.
A similar trend emerged in the spring of 2022. From March to May, the cash reduction amounted to 680 billion rubles. The peak occurred in April: in that month, Russians deposited 315.9 billion rubles into the banks, slightly less than in November of this year. It was then that credit institutions improved the conditions for deposits against the background of a significant increase in the key rate.
Such a high figure was last recorded in January 2019, but is mainly due to seasonal factors. Only in 2015 was a longer decline observed after the tightening of monetary policy. The situation is partially repeated, the only difference is that the current conditions with high rates will continue next year. At the same time, there is a risk of a further increase in the key interest rate.
As Yuri Belikov, general director of the Expert RA rating agency, told Rossiyskaya Gazeta, a similar trend appeared as a result of the increase in tariffs. “This effect may be spread out over time as banks revise deposit rates, getting used to the idea that tight monetary policy won’t be with us for a couple of months and, perhaps, the key rate won’t even be here.” has reached a local peak yet.” points out the expert.
The impact of increasing interest on deposits, which encourages citizens to save money, is also not unique, says the CEO of Expert RA. Maintaining high rates, according to Belikov, often leads to the fact that as salaries and various social benefits are received, their collectible part decreases. “The reduction in cash in circulation is likely to continue in the coming months, especially if the regulator raises the key rate again in mid-December,” he said.
The general director of the NKR rating agency, Mikhail Doronkin, is also confident that the reduction in cash has been facilitated by the new monetary conditions.
“The large-scale increase in interest rates by banks, of course, stimulated the population to more actively replenish deposits and postpone large purchases, including due to the increase in the cost of borrowing,” he notes. In December, he said she, this trend may continue amid a new increase in the key rate. “The trend may change in six to nine months, when the terms of the most profitable deposits expire,” Doronkin added.
In conversation with RG, associate professor at the Department of Global Financial Markets and Fintech at the Russian Economic University. GV Plekhanov Maxim Markov stressed that the reduction in cash in circulation is due to several factors. On the one hand, the key interest rate is rising. “This made deposits again very attractive for citizens, who began to deposit funds in banks that they previously kept in the form of cash,” he explained.
In the last two weeks, the average deposit rate at the top 50 banks has continued to grow and now ranges between 12.79 and 13.16% for three-, six-month and one-year deposits, analysts at Financial services. That is, the growth since the beginning of August amounted to 4.21-5.64 percentage points. The largest increase affected short-term deposits of up to six months, conditions under which banks are more willing to increase so as not to take risks and not overpay.
As the Central Bank points out in its report, almost two thirds of household deposits in the third quarter were placed for periods of up to 6 months. In 2021, its share was 33%. In October, citizens continued to actively place funds in time deposits: the increase was 3.9%, that is, more than 914 billion rubles, while balances on current accounts decreased by 264 billion rubles, a 2%. The most popular were deposits for a period of three months to a year, according to the report.
On the other hand, according to Markov, there is an impact of the seasonal factor, when in the fall there is a decrease in the volume of cash in circulation or a significant decrease in its growth rate, due to the expenditure of funds. retired in the summer for vacations and other expenses, in preparation for school and then for the New Year. At the end of the year, the amount of cash in circulation usually increases sharply, as citizens withdraw spending money during the New Year holidays, the expert notes. However, the next Central Bank meeting may continue the current trend of reducing the amount of cash on hand. We remind you that it is scheduled for December 15.
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