Cash versus the digital ruble: the paradox of the Russian market and the authorities' strategy
In July, the volume of cash in circulation in Russia grew to 643 billion rubles, compared to 450 billion rubles in June. This surge of interest in cash comes at a time when the state is actively preparing the ground for the introduction of the digital ruble. There is a fundamental contradiction here that requires detailed analysis.
Roots of the problem: why Russians are increasingly choosing cash
An analysis of the situation shows that there are two key drivers behind the growing demand for cash. First, there are increasingly frequent mobile internet outages, which make non-cash payments extremely unreliable. Imagine: you are standing at the checkout with goods, and the terminal loses connection—the transaction becomes impossible. Under such conditions, citizens are forced to carry more banknotes than they would like.
Second, from 2026, changes to tax legislation come into force: acquiring services will be subject to VAT at a rate of 22%. This makes accepting non-cash payments more expensive, and small businesses, which have always been particularly sensitive to costs, are increasingly switching to working with cash.
There is also a third, less obvious reason—distrust of the banking system as a whole. Lower deposit rates are pushing citizens to seek alternative ways to preserve their funds, and some cash flows into cryptocurrencies as a hedge against inflation. However, the shift to cash itself carries significant costs for both sides.
For businesses, this means expensive cash collection—from 0.5% to 2% of turnover—as well as the risk of coming under scrutiny under Federal Law 115-FZ if the share of cash in revenue rises sharply. For citizens, it means the risk of losing funds, the inability to recover money in case of theft, and the absence of interest income. Large purchases, such as real estate or a car, made in cash raise questions from financial monitoring authorities.
Promotion strategy: the carrot and the stick
How do the authorities plan to stimulate the transition to the digital ruble under such conditions? The toolkit can be divided into two categories: coercion and economic benefit.
The first category includes the mandatory acceptance of the digital ruble by trade and service enterprises—first large retail, then medium and small businesses. There are also plans to gradually transfer budget payments: pensions, benefits, and salaries of public sector employees to the new platform. This will make settlements fully transparent for the Federal Tax Service, significantly complicating the concealment of income.
The second category is the economics of transactions. The commission for acquiring the digital ruble is legally fixed at no more than 0.3%, which is significantly lower than commercial acquiring with 22% VAT. For citizens, transfers and payments in digital rubles will remain completely free and without limits, unlike the Faster Payments System (SBP). A separate argument is smart contracts, which ensure transaction security, for example, when purchasing real estate, eliminating the risk of fraud on the part of the seller.
The key question is connectivity. The Central Bank is actively developing offline payment technology for the digital ruble, which would allow payments even during mobile internet outages. However, expert opinions here diverge: some consider this a ready-made solution to the problem, while others believe that the only working tool will remain "white lists" of significant services, but processing them will take time.
My view on the situation
The growth of cash is a forced reaction to the environment, not a conscious choice by citizens. And the state, it seems, understands that reducing the share of cash will not happen on its own—active measures will be required. However, the key risk is that the digital ruble, despite all its advantages, is perceived by the population as a tool of total control. The success of its implementation will depend not only on economic incentives but also on the authorities' ability to build trust in the new payment infrastructure. Otherwise, we may end up in a situation where the digital ruble exists formally, while real demand remains on the side of cash.