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When Russia refuses cash

When Russia refuses cash

28 2018 June
Tags:Russia, Economy, Money, Analytics

The proposal to limit the circulation of cash regularly emerges in the Russian information field for more than ten years. However, despite the declared fight against corruption, it also regularly goes to the bottom. Why even those Russians who are accustomed to electronic money, against restrictions for cash? And what these restrictions can give?

This time the issue was raised by bankers. Mr. Ozerov, head of Rusfinance Bank, acted as a spender. He recalled that in some countries of Western Europe (for example, in Italy), the buyer can not pay cash in cash, if its value exceeds one thousand euros. "We will also come to this, it's a matter of time," he warned.

The deputy chairman of the board of Sberbank, Alexander Torbakhov, agrees with his colleague. According to him, "one can talk for a long time about the fight against corruption, but why not forbid to pay with cash with suitcases?" "If the state helped in this movement, it would be quite healthy," he added.

Indeed, the state policy in this matter is difficult to call unambiguous and consistent. The benefits of cash payment restrictions are regularly discussed in the State Duma, the government and the Kremlin, but this is not reflected in legislation.

In 2012, the Bank of Russia and the Ministry of Finance launched a discussion on limiting cash balances. The corresponding draft law was submitted to the State Duma, but it was never adopted.

In January 2017, Finance Minister Anton Siluanov also proposed to limit cash payment in case of expensive purchases. He was supported by the head of the committee of the lower house on budget and taxes Andrei Makarov and head of the financial market committee Anatoly Aksakov, but stressed that the implementation of this idea should be "step by step".

Dmitry Peskov, the presidential press secretary, confirmed on 21 February that the movement towards refusal of cash and the transition to payment by cards will be, but its pace depends on the Russian realities in terms of the spread of banking services. And already 27 February Siluanov stated the following:

"While we have postponed these issues in order to act accurately and not create any imbalances in cash circulation."

Radical supporters of the restriction of payment in cash (up to their complete cancellation) like to accuse the government that it thus indulges the corrupt officials. But the main problem is that most of the citizens of Russia - for all their hatred of bribes - oppose any restrictions in the sphere of cash circulation. Last March VTsIOM published the results of the poll, according to which, "the proposal to limit cash payments to more than three-quarters of Russians (80%) is considered more a violation of the rights of citizens than a measure to combat crime, bribery, tax evasion."

"Payment for purchases by card or check for the majority of residents of our country is not yet a daily rule," commented sociologists on the survey data.

Indeed, despite the fact that according to the Central Bank, the share of payment for goods and services with cards increased from 3,5% in 2009 to 38% in 2017, more than half of Russian citizens still prefer the good old cash. But even those who are accustomed to paying a card, still oppose any restrictions. The reasons are called different. There is also a mistrust of the banking system after the hyperinflation and default of the 1990, and a significant share of the "gray" labor sector, in which payment occurs in cash, and the fear of expropriation by the state of funds for which the person does not have a "certificate".

The exotic reason for the inadmissibility of refusing cash was the patriarch Cyril. According to him, "the church is very concerned that modern technical means can totally limit human freedom." He cited the example of "one of the European countries," where people wishing to obtain citizenship are offered to watch a video about the life of the country, its customs and laws, in which the theme of LGBT is presented "in colors". Only if the person agrees with everything he saw, "he passes the screening."

"And if access to finance will be limited to this kind of conditions? That's about these dangers today, the church speaks at the top of its voice, "the primate of the Russian Orthodox Church summarized.

It is unlikely that most Russian citizens seriously fear that paying for a card will need to publicly support gays. But in the main they agree with the patriarch and do not want any restrictions on cash.

In addition, it should be understood that such restrictions alone can not eradicate corruption. Yes, unrecorded cash received as a result of bribery will be more difficult to spend on an expensive car or real estate, but it is not so easy to do now. A variety of "laundries" that turn "gray" and "black" money into supposedly "honestly earned", have long existed almost all over the world. If restrictions on cash are introduced, bribe takers, "hauliers", "decision makers" will remain in their places, just a percentage for "money laundering" will grow somewhat.

Given the difficult public reaction to a really overdue pension reform, a sharp increase in gasoline prices and many other problems, it is unlikely that the government in the coming months (and possibly even years) will pedal the topic of limiting cash payments. Over the millennia of human civilization, people are so used to cash - paper, gold, cowrie shells and so on, that giving up this habit is unlikely to be easy and fast.

But as you enter the active economic life of a generation that does not remember the banking problems of 1990 and for which payment by card is even more natural and familiar than paper money, the "suitcases of cash" will naturally go down in history. And then the legislator will simply have to fix the already existing situation.

Anton Krylov
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