Russia’s struggling economy hit by new financial setbacks

 When Vladimir Putin ordered the full-scale invasion of Ukraine in 2022, he likely did not consider that the war he was starting would last for years. That war has cost Moscow a lot of men and material, but it's also starting to have consequences at home. 

Russia is reeling from years of war 

The Russian economy is reeling from years of fighting and sanctions imposed by Kyiv’s partners and allies. However, Russia is facing a new problem, if a report from Ukraine’s Foreign Intelligence Service is to be believed. Russians are steering clear of banks. 

A report from Ukrainian intelligence 

On November 8th, the Ukrainian Foreign Intelligence Service reported that confidence in long-term bank deposits inside of Russia has collapsed. According to the report, 70% of Russians are placing their savings in banks for a period of just six months. 

What Ukraine knows about Russia’s issues

Three-month deposit terms have become the most popular option for savings deposits in the country, with 33.2% of Russians choosing short-term deposits over long-term ones in October. Demand for one-year deposits has collapsed and does not exceed 7%.

Russians are capitalizing on short-term deposits

“Being wary of long-term risks, Russians seek to quickly obtain at least some benefit,” the Ukrainian Foreign Intelligence Service reported. This attitude makes a lot of sense considering that Russia’s benchmark interest rate in late October was 16.5%. 

The Deposit Interest Rate in Russia 

According to information from Trading Economics, the “Deposit Interest Rate in Russia decreased to 15.71 percent in August from 17.41 percent in July of 2025.” Russians may be trying to quickly capitalize on higher short-term interest rates before the game of financial musical chairs that the country has been playing comes to a halt.  

Wary of financial collapse in the future

The Ukrainian Foreign Intelligence Service noted that the collapse in long-term banking deposit demand is a result of growing distrust of Russia’s banking system and instability of the Russian economy. However, it is difficult to know what is actually happening. 

Is the Ukrainian intel assessment accurate?

While the report from the Ukrainian Foreign Intelligence Service could be accurate, its interpretation of what’s happening regarding the demand for long-term savings deposits could be skewed because of the ongoing war. However, there are signs of issues facing the Russian economy and banking sector. 

Serious economic worries in Russia 

In July 2025, Bloomberg reported on the many signs showing that Russia’s economy was in trouble; among the most interesting issues were increasing concerns regarding the level of bad debt that was on the balance sheets of the country’s biggest banks at the time. How this situation will play out has yet to be seen, but it could end in disaster.