How long will cash circulation exist in Russia?

In spite of late years acquiring onrush in Russia, the volume of cash circulation is not only far from diminishing, but is growing rather fast. As for 1st January 2014, the total amount of circulating bank notes and coins was 8 135,0 bln. RUR. That is 8,3% higher in comparison with the previous year with its 7 675,4 bln. RUR. 99% of the total amount of current money falls to the share of bank notes. Bank note of 1 th. RUR denomination prevails in the total number of bank notes (34% of total). The second is bank note of 100 RUR denomination (18% of total).

All efforts of financial authorities to stimulate the process of transition to electronic payment instruments haven’t brought the desired results yet. Recorded growth of cash circulation is superfluous, given that official inflation for the year was 6,5%.

There are several reasons: the significant part of the population in Russia still has low income (below average) and goes shopping in small retail stores and markets, where cash is the only mean of payment. Moreover, the level of financial awareness in Russia is low. One shouldn’t forget about psychological aspect: the population is used to settle in cash and it will take much time and considerable efforts to redirect it on using electronic payment instruments.

The projects on legal restraint of cash payment within the frame of certain amount are in the talking stage for already several years. But things haven’t budged an inch. Payment for major purchases like apartment or car is made in the same old way – by long-time adding and checking of paper money.

Along with obvious advantages of electronic money, one more utmost importance bars the adoption: card or account is pegged to a servicing bank. Credit institution takes bank’s commission when natural person or legal body draws or transfers money using other bank. This won’t happen still and all in «transference» of cash. The list of claims to digital cash is completed by time of transferring from one account to another and limitations on operations with money on card.

That is why together with the legislative initiative, financial authorities should think over commission banks policy and conditions of clients’ accounting management. The person is hard to see why he is restricted in using his own money, and has to additory pay for converting it to e-money.