30.08.2024, 09:22
The Central Bank allowed a reduction in cash in circulation
Source: OREANDA-NEWS
OREANDA-NEWS The volume of cash in circulation by the end of 2024 may decrease by 200 billion rubles or grow by the same amount, the Central Bank predicts. If the indicator decreases, it will be the first reduction in a calendar year since at least 1998, RIA Novosti found out according to the regulator and Rosstat.
"The change in the volume of cash in circulation by the end of 2024 is projected in the range from -0.2 to 0.2 trillion rubles. It is expected that in the second half of the year, the return of cash to banks, increased compared with seasonal dynamics, will decrease, but will continue to affect the dynamics of the indicator in 2024," the draft main directions of monetary policy for 2025 and the period 2026 and 2027 says.
The reduction of the money supply in 2024 will occur due to the tightening of the Central Bank's monetary policy, while the potential for rate growth remains at meetings in September, October and December, Maxim Osadchy, head of the analytical department of the BKF Bank, shared his opinion with RIA Novosti. "An increase in the key rate will lead to an increase in deposit rates, which, in turn, will contribute to the inflow of funds from the population to banks and, accordingly, reduce the amount of cash in circulation," he explained.
Another factor in reducing the cash supply may be the spread of non-cash payments. "The use of cash is becoming less attractive to the population. The infrastructure for using non—cash payments continues to improve, and the ability to transfer money instantly between your accounts has reduced the demand for cash," said Ilya Fedorov, Chief Economist at BCS World of Investments.
If the Central Bank's negative forecast is realized, then, according to RIA Novosti calculations, this will be the first reduction in the cash supply at the end of the year since at least 1999 — there is no earlier data in the public domain. The indicator came closest to a decrease in 2016, when over the calendar year it grew by only 0.9%, or 67.6 billion rubles.
At the same time, in the first half of the year, the volume of cash in circulation in Russia has already decreased by almost 430 billion rubles. A similar situation developed in the first half of 2014 (-222 billion rubles), 2015 (-512 billion) and 2019 (-146 billion), but the decline was offset, with a significant increase in cash in circulation traditionally occurring in December.
"The change in the volume of cash in circulation by the end of 2024 is projected in the range from -0.2 to 0.2 trillion rubles. It is expected that in the second half of the year, the return of cash to banks, increased compared with seasonal dynamics, will decrease, but will continue to affect the dynamics of the indicator in 2024," the draft main directions of monetary policy for 2025 and the period 2026 and 2027 says.
The reduction of the money supply in 2024 will occur due to the tightening of the Central Bank's monetary policy, while the potential for rate growth remains at meetings in September, October and December, Maxim Osadchy, head of the analytical department of the BKF Bank, shared his opinion with RIA Novosti. "An increase in the key rate will lead to an increase in deposit rates, which, in turn, will contribute to the inflow of funds from the population to banks and, accordingly, reduce the amount of cash in circulation," he explained.
Another factor in reducing the cash supply may be the spread of non-cash payments. "The use of cash is becoming less attractive to the population. The infrastructure for using non—cash payments continues to improve, and the ability to transfer money instantly between your accounts has reduced the demand for cash," said Ilya Fedorov, Chief Economist at BCS World of Investments.
If the Central Bank's negative forecast is realized, then, according to RIA Novosti calculations, this will be the first reduction in the cash supply at the end of the year since at least 1999 — there is no earlier data in the public domain. The indicator came closest to a decrease in 2016, when over the calendar year it grew by only 0.9%, or 67.6 billion rubles.
At the same time, in the first half of the year, the volume of cash in circulation in Russia has already decreased by almost 430 billion rubles. A similar situation developed in the first half of 2014 (-222 billion rubles), 2015 (-512 billion) and 2019 (-146 billion), but the decline was offset, with a significant increase in cash in circulation traditionally occurring in December.
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