A financial crisis long predicted by Russia experts and Kremlin insiders appears to have finally arrived, as banks see depositors scrambling to withdraw their money amid fears it could be confiscated.
Accordingly, Russians withdrew $3.4 billion (286.4 billion rubles) in the first half of August Data cited by the Central Bank Washington Post. This is after $7.3 billion was withdrawn in July and $4.5 billion in June.
“Drones are flying. Things are burning down. Nervousness is growing. And people’s everyday wisdom may take hold that they need to have cash under their pillow and not somewhere in the bank where it may never be returned,” said a former tax official postand added that banks had tied up much of their capital in loans elsewhere.
The situation is reminiscent of the iconic scene from the film It’s a wonderful lifewhen panicked depositors show up at the Bailey Bros. Building & Loan demanding their cash, only to discover it’s not all there.
The bank run in Russia is unlikely to be as dramatic or hasty. But the mass withdrawal by lenders this year is expected to almost double to $24.7 billion compared to 2022, when Vladimir Putin launched his invasion of Ukraine.
At the time, Russia had plenty of cash and had to pay for a short war. But more than four years later, the invasion has turned into a quagmire that has ruined the Kremlin’s finances.
The budget is sinking into deeper deficits, the sovereign wealth fund is almost depleted and tax increases are putting a strain on consumers who are already struggling with high inflation.
Moscow has ordered banks to provide capital to the defense industry, but many of those loans have become bad debts. Now, the loss of deposits in the financial sector has created a liquidity crisis so severe that it threatens Russia’s ability to finance its war.
Taras Skvortsov, senior executive of a leading retail lender Sberbanktold Russian radio that many banks do not have cash to buy government bonds.
Actually the Treasury Bond auctions have been halted indefinitely last month due to higher borrowing costs and weak investor demand. The auctions are the Kremlin’s main source of domestic borrowing to offset its budget deficit, which reached $76 billion at the end of July.
As government funding sources dry up, ordinary Russians fear their money could be next. The head of the Russian Communist Party recently stated in parliament that 130 trillion rubles should be “mobilized” in bank accounts to address the country’s economic and budgetary problems.
Meanwhile, the Treasury Department is preparing legislation that could give it access to $40 billion in retirement savings held in privately managed funds.
This comes after Russian oligarchs’ companies were nationalized last year and $51.5 billion in assets were confiscated for the state.
“If the government needs cash, Putin will just grab assets. He doesn’t care,” said an associate of a Russian billionaire post. “And that’s the direction I think it’s going.”
Warnings about Russia’s finances have been increasing for months. In June 2025, Russian banks raised the alarm bells possible debt crisis as high interest rates affected borrowers’ ability to repay loans. Also this month, the chairman of the Russian Union of Industrialists and Entrepreneurs warned that many companies were in a “pre-default situation.”
The Center for Macroeconomic Analysis and Short-Term Forecasts, a state-backed Russian think tank, said in December that the country could fall into a banking crisis by October as credit problems worsen and depositors withdraw their funds.
Earlier this year, Russian officials told Putin that a The financial crisis could break out by summer amid rapid inflation.
In May, sources told the Russian newspaper Izvestia that almost 25% of the bond market is currently at risk of default as companies that borrowed at low interest rates have to refinance at much higher interest rates. The volume of debt that needs to be rolled over this year is about twice as high as last year, increasing pressure on cash flows and increasing competition for liquidity.
And according to a European intelligence report from last JuneRussian lenders are vulnerable due to rising debt and deteriorating credit. It said the number of Russians who filed for bankruptcy last year rose by almost a third to more than 500,000.
“The situation creates the illusion of a dynamic economy, which in reality hides an explosive situation that could trigger an economic shock, such as an ambitious package of sanctions against banks,” the report continues Reuters.
The deteriorating state of Russia’s financial sector reflects its performance on the battlefield. New Ukrainian tactics and drones have halted Russia’s advances, decimating the country’s oil infrastructure and increasing losses beyond replacement rates.
And just as Russia is looking for money to confiscate, reports suggest the military is preparing to increase the number of men it seizes to fill the ranks.
The authorities were already there using coercive measures to find new troops. Now sources told the Wall Street Journal that the military prepare plans and procedures for broader mobilization.
But due to an expected political backlash, the Kremlin may wait until after next month’s parliamentary elections to make the announcement.
An earlier mobilization in September 2022 triggered a mass exodus of hundreds of thousands of men who fled to neighboring countries such as Georgia and Kazakhstan.
Rumors of a new one have already driven up cross-border traffic. In addition, real estate prices in Georgia and Armenia have recently skyrocketed in anticipation of another exodus, real estate agents said magazine.