The storming of Moscow last month by the controversial Wagner Group sparked a monetary hurricane in the Russian banking sector, as the nation’s central bank revealed earlier this week. The sudden political turmoil led to a swift and substantial reaction from the public, prompting a mass bank exodus as panicked Russians withdrew a staggering 100 billion rubles (approximately $1.1 billion).

To put this in perspective, of the 500 billion rubles that exited the country’s banks throughout June, a significant one-fifth was yanked out within the three-day span from June 23 to 25. This period aligns with when the Wagner Group, a private military company led by Yevgeny Prigozhin, pointed its forces toward the capital, following some heated disputes with the Russian military’s top echelons.

Despite the revolt subsiding within a day, the political instability it engendered led to an immediate and drastic public reaction. This withdrawal figure, according to the central bank, was the highest cash demand since late 2022 when Russia initiated a military mobilization decree.

While the central bank assured that the financial system weathered the liquidity outflows without policy disruptions, it also hinted that this event could potentially influence future banking operations.

This period of upheaval didn’t stop at the national level. The tumult also triggered a surge in demand for foreign currency among the Russians, rising by a whopping 70-80% in some regions. The amplified demand for foreign money played a part in pushing the ruble to a 15-month low against the dollar.

In a conference held in St. Petersburg, Elvira Nabiullina, the Governor of the Bank of Russia, announced that there were no immediate plans to intervene and bolster the ruble’s exchange rate. She believes the current downward slide of the ruble is the outcome of a trade imbalance.

Investors and financial watchers across the globe are keeping a close eye on these developments, as they reveal the fragility of the Russian financial landscape when faced with sudden internal strife. As the dust settles from the Wagner Group incident, the coming months will be telling in terms of the impact and the resilience of Russia’s banking sector.