Recent Changes in Cuban Financial Landscape: Reintroduction of US Dollar Deposits Offers Limited Relief

In June 2021, the Central Bank of Cuba (BBC in Spanish) stopped accepting the use of US dollars in its banking and financial institutions through Resolution 176. Amid a strong economic crisis and in response to the increase in sanctions imposed by the United States, one of them, for example, the designation of Cuba as a State sponsor of terrorism, a situation that generated a strong impact on foreign trade by stopping the island's international financial transactions.?

The resolution mentioned above represented several inconveniences for the Cuban population, such as the impossibility of acquiring dollars legally, thus disproportionately increasing its price on the black market. Currently, the official exchange rate is 120 Cuban pesos (cup), while it is listed at 180 on the black market.

However, on April 10, 2023, the BCC, through Resolution 63, announced that, as of April 17, 2023, cash deposits of US dollars would be accepted again in personal bank accounts since the conditions in Cuba have changed favorably after the end of the pandemic. The resumption of tourism and the entry of foreign currency joins the re-establishment of the sending of remittances through the Western Union company. This service was suspended during the government of former President Donald Trump.

Nevertheless, the BCC affirms that the decision responds to "The current circumstances and priorities of economic policy" but warns that "the underlying problem has not been resolved." Since 1962, Cuba has been subjected to a policy of economic pressure imposed by the United States aimed at hindering its external financial flows and preventing deposits of US dollars in cash from abroad. This means that, as of yet, the dollarization of Cuba will only benefit operations on the internal market because the restrictions imposed that prevent using dollars on international financial transactions remain.

Despite the above, the "fula", the name by which the dollar is known on the island, maintains its hegemony.

Written by:?Pilar Lopez

*This article is informative and is not to be used as legal, economic, or commercial advice.

Source: Banco Central de Cuba, Nota del Banco Central de Cuba, Forbes Mexico, Cubadebate