Thousands of Russian citizens, including elderly residents in Moscow, are withdrawing savings from banks to avoid potential government seizure. This financial panic is occurring alongside warnings from economists about a looming social crisis and the sudden suppression of the anti-war Yabloko party.
The £21.3 billion surge in cash circulation
The Russian financial system is currently facing a severe crisis of confidence. According to the report, cash in circulation has increased by £21.3 billion this year as citizens move their money out of formal banking institutions. A 70-year-old Moscow pensioner described being "concerned and scared," opting to hide roubles under her mattress to protect them from being seized by Vladimir Putin to fund military operations or stabilize the economy.
This mass withdrawal is exacerbating liquidity issues within the Russian financial sector. The report says these problems are compounded by a wave of bad debts, which stemmed from a Kremlin-driven lending boom designed to accelerate military production for the war in Ukraine. This creates a precarious loop where the state must fund a war while its citizens lose faith in the safety of their deposits.
Andrei Klepach’s warning of a "Gorbachev-style" social crisis
Internal dissent is reaching the highest levels of economic planning. Andrei Klepach, a 67-year-old senior macroeconomist, warned Vladimir Putin in a leaked speech that Russia is losing its war of attrition against Ukraine. Klepach argued that Western financial support ensures Ukraine will not collapse, while Russia risks falling behind not only the US and China but Ukraine itself in certain respects.
Klepach’s analysis drew a direct line between current conditions and the historical collapses of Tsar Nicholas II and President Mikhail Gorbachev. This parallel suggests that the current economic strain could trigger an "explosive social crisis" if the state cannot maintain its promise of stability. While the Kremlin responded by firing Klepach for his analysis, exiled analyst Vyacheslav Shiryaev suggests that the warnings should leave Vladimir Putin "horrified."
Yabloko’s three-week surge and the Kremlin's U-turn
The political landscape in Russia is showing unexpected volatility. The Yabloko party, a small liberal anti-war group, saw its support quadruple in just three weeks. This sudden momentum suggests that the anti-war message is resonating with a broader segment of the population than the Kremlin previously estimated, turning a fringe party into a potential focal point for dissent.
In a sharp reversal, Vladimir Putin's administration blocked Yabloko from standing in the national election after initially allowing it. this U-turn indicates a growing fear within the Russian leadership that the party's momentum could destabilize the regime's grip on power, forcing the state to rely on exclusion rather than electoral competition.
The mystery of the leaked speech and bank liquidity
Despite these reports, several critical details remain unverified. It is unclear who leaked Andrei Klepach's speech or how widespread his views are among other state economists who may be fearing similar professional retaliation. Furthermore, while the report highlights a £21.3 billion increase in cash, the total volume of "bad debts" created by the military lending boom has not been precisely quantified.
The source primarily relies on accounts of individual citizens and leaked documents, leaving it unclear if the Russian Central Bank has implemented new, undisclosed measures to stem the tide of withdrawals. Whether this is a temporary panic or a systemic collapse remains the primary unknown.
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