Russia’s shadow economy fuels cash boom
Russian dictator Vladimir Putin (Photo: Sputnik/Vyacheslav Prokofyev/Pool via REUTERS)
About half of Russians have been asked to pay for goods or services in cash since the start of 2026, with one in three facing this request multiple times, The Moscow Times reported on March 18, citing the latest survey by the Institute of Psychology of the Russian Academy of Sciences (IPS).
Roughly 18% of respondents report receiving such requests regularly. Of those offered cash payments, one-third were promised discounts or other incentives.
Cash requests are most common at small neighborhood stores (46%), markets and fairs (45%), and in the private services sector—from tutors to plumbers (21%). Beauty salons and auto services see cash requests in roughly 15–17% of cases, while housing rentals and children’s clubs report the fewest at 8%.
Residents of the North Caucasus Federal District (67%), Moscow, and St. Petersburg (59%) are most frequently asked to pay in cash.
Analysts link this “renaissance” of cash to businesses moving into the shadow economy amid rising VAT, adjustments to insurance premiums, and a lowered VAT threshold for enterprises using the simplified tax system.
The survey found that 27% of Russians have been asked to pay in cash more often over the past six months, even though only 14% of urban residents typically use cash. Among low-income groups, cash use rises to 27%, and among affluent respondents, 24%.
The IPS suggests worsening economic conditions and gradual tax increases are pushing both poorer and wealthier Russians toward informal, cash-based transactions.
Data from the Bank of Russia show growing demand for cash: in January 2026, clients withdrew more than 1.6 trillion rubles ($19.2 billion) from accounts, a record since March 2022, while only 468 billion rubles ($5.6 billion) returned to term deposits. This left a net cash outflow from the banking system of approximately 1.1 trillion rubles (aout $13.2 billion).
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