Russia faces mounting bank run as Kremlin scrambles for war financing
Depositors have withdrawn billions of rubles from Russian banks, creating a liquidity squeeze that threatens the Kremlin's ability to fund its war.
Bank deposits in Russia have surged downward, with $3.4 billion withdrawn in the first half of August, following $7.3 billion in July and $4.5 billion in June, according to central bank data. A former finance official warned that citizens are hoarding cash amid fears of seizure, while senior Sberbank executive Taras Skvortsov said many banks lack the liquidity to purchase government bonds. The finance ministry has halted bond auctions, cutting off the Kremlin's primary domestic borrowing channel, as the budget deficit widened to $76 billion by July's end.
To plug the shortfall, the Communist Party leader urged parliament to mobilize 130 trillion rubles in bank accounts, and the ministry is drafting a law to tap $40 billion in privately managed pension funds. Meanwhile, state-seized assets total $51.5 billion, and an associate of a Russian billionaire predicts further grabs to secure cash for the war effort.
Why it matters
A shrinking banking pool jeopardizes Russia's war budget and could trigger broader economic instability.
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