In July, about 179 billion rubles ($2.4 billion) were put into circulation – a steep drop from the whopping 700.9 billion ($9.5 billion) in March.

Banks began to experience a rapid outflow of customer funds in March after a collapse in oil prices, the Ruble exchange rate, and the first phase of Covid-19 measures. According to Russia’s Central Bank, the combination of financial crisis and imposition of self-isolation restrictions encourage citizens to keep physical cash.

According to Denis Poryvai, an analyst at Raiffeisenbank, the demand for cash came from both individuals and businesses, with many firms unable to operate in the challenging financial situation. He also explained that many companies moved towards purely cash transactions, with more and more enterprises seeking to avoid paying tax.

“A certain volume of operations went into the shadows and remained there,” he said.

Speaking to Russian newspaper RBK, a spokesperson for the Bank of Russia explained that the demand for cash will normalize as restrictive measures roll back and economic activity recovers, but the “process will be gradual,” and may extend into 2021.

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