Russia’s banking sector has returned to a record structural liquidity deficit, exceeding 2.7tn roubles on 13 August, according to data from the Central Bank of Russia reported by RBC. The figure is the highest since March 2022, when banks were hit by a severe financial shock following Vladimir Putin’s launch of the war against Ukraine and the sweeping international sanctions that followed.
The deterioration is tightening the financial system’s capacity to support government borrowing at a time when Russia has limited access to international credit markets and is covering rising expenditure, including the costs of Putin’s war, through domestic borrowing. The immediate pressure is falling on banks, the state budget and the wider availability of credit.
A fivefold rise in seven months
A structural liquidity deficit occurs when credit organisations owe more to the regulator than they hold in deposits and correspondent accounts at the central bank. The measure stood at 587bn roubles at the start of 2026. From April it remained consistently above 1tn roubles, before reaching between 2tn and 2.7tn roubles in July and August.
Over the first seven months of the year, the deficit therefore increased almost fivefold. Senior executives at major Russian banks have begun describing liquidity conditions in the sector as a problem, as institutions face a persistent shortage of freely available funds and are forced to rely more heavily on the Central Bank of Russia’s lending instruments.
That dependence matters because central-bank funding is expensive when the key interest rate is high. Although the rate has fallen to 14%, borrowing liquidity from the regulator raises banks’ funding costs, reduces their financial buffer and limits their ability to manage cash independently.
The pressure is also being compounded by money leaving the banking system. More than 640bn roubles was withdrawn in July alone, followed by a further 286.4bn roubles in the first two weeks of August. The outflow into cash and the shadow economy points to weakening confidence among households and businesses, while reducing the pool of funds available for lending to the real economy.
Fewer banks able to fund the state
Sanctions have restricted Russia’s access to global capital markets, leaving the country increasingly reliant on domestic buyers for federal loan bonds, known as OFZs. Russian banks are important participants in that market, but a sector carrying a 2.7tn-rouble liquidity deficit has less room to finance new government borrowing.
To preserve demand for OFZs, the finance ministry is being forced to offer higher yields. That makes government borrowing more attractive to investors, but increases the cost of servicing the public debt and adds pressure to the budget. If the strain continues, the consequences could include higher taxes, stronger inflationary pressure and reductions in spending on social services, healthcare and education.
The liquidity squeeze is also likely to influence how commercial banks operate. Institutions dependent on costly central-bank funding may cut expenses, postpone development projects, optimise staffing and impose tighter conditions on customers. The result is a banking system with less flexibility at precisely the point when the state needs it to absorb more domestic debt.
Dispute over what the figures mean
The Central Bank of Russia has sought to play down the significance of the increase, arguing that the liquidity involved is used only for settlements within its payment system. On that interpretation, the funds are not connected with bank deposits or the availability of household and business loans, and do not directly affect citizens or companies.
That explanation does not remove the wider financial pressure. The rapid growth in borrowing from the regulator shows that banks have fewer market-based funding options and are becoming more dependent on the central bank’s ability to maintain stability. It also leaves them with fewer alternatives to expensive official liquidity now that external financing is severely constrained.
Central-bank officials have attempted to describe the rise from 587bn roubles to 2.7tn as a return to the “normal” levels seen between 2012 and 2017. But that comparison overlooks the fundamentally different conditions facing Russian banks today. During that earlier period, the sector was not operating under the large-scale sanctions imposed after Putin began the war against Ukraine and retained access to international capital markets and relatively cheap external funding.
The key question now is whether Russia’s banks can continue financing the government’s borrowing needs without further increases in funding costs, deeper restrictions on credit or a larger withdrawal of money from the formal banking system.
Should Russia prioritise sustaining government borrowing or protecting the banking system’s capacity to support households and businesses?
