In a special presentation on Cuban television, Marta Sabina Wilson González, President of the Central Bank of Cuba (BCC) Yamilé Berra Cires, Vice-President, and Carlos Fernández de Cossío, General Director of the United States at the Ministry of Foreign Affairs (MINREX), announced that because of the restrictions established by the U.S. blockade against the Cuban financial system, the BCC will temporarily suspend U.S. cash at its banks. The suspension will begin on June 21.
The BCC representative said that this is a “protection measure for the Cuban banking and financial system, which applies only to U.S. currency in cash, and not to accounts in that currency.”
The statement from the BCC read:
“Due to the obstacles imposed by the economic embargo of the United States for the national banking system to be able to deposit cash in US dollars collected in the country abroad, a decision has been taken to stop accepting the banknotes of that country as the currency in the Cuban banking and financial system,”
Cubans can still deposit dollars into their accounts from June 11 to June 20.
At present, there are businesses in Cuba that only accept electronic payments in US dollars. Cubans wishing to make purchases must have available funds in their accounts to back up the transactions.
Other businesses and services use the Cuban national currency, the CUP.
The BCC said this “is a measure to protect the Cuban banking and financial system, which applies only to the U.S. currency in cash, not to existing accounts in that currency.”
BCC also stated that “the decision of the Cuban Government on June 16, 2020, to abolish the 10% levy on the U.S. dollars in cash as part of the measures in place during the COVID-19 pandemic, led to an increase in deposits of U.S. currency in Cuban banks.”
The scenario is further aggravated by the increase in U.S. cash arriving on the Island as a result of the blocking of remittances by the U.S government.
In June 2020, Fincimex was added to the restricted list by the State Department.
Last September, the American International Services, (AIS) was added to the list of restricted Cuban entities.
In November, the U.S. government stopped all remittances to Cuba.
On January 1, the State Department added Banco Financiero Internacional (BFI) to the list of restricted Cuban entities. The bank became subject to additional restrictions, and some foreign banks refused to deal with BFI.
In January 2021, the State Department included Cuba on the list on states that allegedly sponsor terrorism. The action resulted in the reluctance of banking and commercial institutions to maintain links with Cuban entities. This includes organizations engaged in receiving, processing, or operating in foreign currency.
Measures against the Cuban financial system began at the end of the Obama administration. Major international banks were fined as much as $2 billion for carrying out banking operations with Cuban banks and businesses.
Ms. Berra Cires, the BCC Vice President, said that since 2005 over 35 foreign banks have closed their operations with Cuba. Of these, 24 did so during the Trump administration. Of these 35 banks, 12 were fined millions of dollars for violating OFAC regulations.
As of 2017, 106 financial institutions canceled the SWIFT key they had for Cuban banks. In 2020, there have been over 190 actions against Cuban banks by over 95 foreign banks. These range from limiting operations carried out by Cuban banks with the rest of the world. The use of the U.S. dollar increased because of the U.S. prohibitions. Foreign banks have canceled their banking services, they refuse to make transfers to and from Cuba. Correspondent banking offices were closed. Their collateral backup accounts refused Cuban letters of credit. They refused payments and collections, further hindering the function of the banking system.
The measure, Ms. Wilson, BCC’s President said, is temporary, until the conditions that cause it ceases to exist.
David Urra is the chief marketing analyst at International Consulting & Representation Services/Cuba (IcarusCuba). He has produced market studies for a wide range of Latin American, European and U.S. clients exploring market entry possibilities in Cuba’s IT, tourism, ranching, pharmaceutical and manufacturing sectors.