Deposit Drama: Russia's Central Bank Fights Rumor Frenzy

The Russian central bank addressed rumors of freezing retail deposits, fueled by rising interest rates and a potential savings bubble. Despite fears, the bank called the idea absurd, as freezing deposits would harm financial stability. The situation evokes memories of past crises impacting Russians' savings.

In a bid to quell swirling rumors, the Russian central bank has categorically dismissed speculation concerning the freezing of retail deposits. These rumors emerged amidst an unprecedented surge in deposits, driven by high interest rates aligned with the central bank's 21% benchmark rate.

To lure depositors, banks offered eye-catching short-term rates of up to 30%, sparking a rush as consumers eagerly sought the best financial returns. However, fears of a burgeoning savings bubble have led to heightened public anxiety.

The central bank reassured depositors that freezing accounts would not only violate citizens' rights but also destabilize the financial system. Historical crises, including the hyperinflation in 1991 and the 1998 banking sector collapse, loom large, underscoring the critical need for maintaining trust in Russia's banks.

(With inputs from agencies.)