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What Will Happen in the National Banking System?

Minister-President of the Central Bank of Cuba, Martha Wilson, explains the coming changes in banking for clients. Photo courtesy: Radio Reloj, Cuba

What will happen in the national banking system was addressed on the nightly television production Mesa Redonda (Round Table) by the head of the Commission for Implementation and Development of the Guidelines, Marino Murillo; the Minister-President of the Central Bank, Martha Wilson, and the First Vice President of that institution, Francisco Mayobre.

Murillo highlighted the economic importance of the banking system in the application of the so-called Tarea Ordenamiento (Ordinance Task), at a time when it is about distributing wealth in a different way.

The banking system has a lot of impact on individuals and on cash flows when the CUC disappears as of January 1st, he said.

He pointed out in his television speech that the stores will continue to make sales in CUC for six months, but provide change in pesos, to be able to collect that currency that will later disappear.

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Bank accounts

The minister-president of the Central Bank of Cuba, Martha Wilson, explained that the accounts in CUC for citizens will be kept for six months, although no new deposits can be made, and then they will automatically be converted into pesos at the rate of one to 24.

If after that time the holder does not appear at the bank, he will receive an additional bonus of between 1.5 and 3.5 percent, he said when speaking at the Round Table.

She said that as of January 1, the accounts in CUC that they use to collect and pay self-employed workers, individual farmers and other forms of non-state management will also be automatically changed to pesos.

Wilson pointed out that the same will happen with the stimulus accounts associated with magnetic cards or those of collaborators with the 30 percent benefit.

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Facilities for natural persons

The minister-president of the Central Bank of Cuba, Martha Wilson, stressed that as of January 1 next, the banking entities will offer certain facilities for individuals as part of the Ordering Task.

She explained that customers who have a bank account in CUC can request to switch to Freely Convertible Currency, a process that will have certain special characteristics. Wilson pointed out that those who opt for this option will receive a Certificate of Deposit, since at this time the Bank does not have sufficient liquidity for the support in foreign currencies. Those users will have to wait to be able to carry out any transaction with the funds in the account, but they will receive an annual interest of 0.15 percent and the possibility of extracting the amount saved in pesos, if they so consider it.

Responding to concerns raised at the Mesa Redonda, the minister-president of the Central Bank of Cuba, answered questions from the population related to banking services.

The official explained that for the moment it will not be possible to buy foreign currencies in banks and CADECAS, since it is necessary to increase liquidity and stabilize the economy, processes that are hampered by the decrease in tourism in the country due to the pandemic and of the effects of the blockade.

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She also pointed out that those people who wish to withdraw Freely Convertible Currency from their account, should go to a bank branch and make the request at the counter, since the ATMs will only dispense pesos as of January 1st.

It was also explained on the TV presentation, that the existing accounts in Freely Convertible Currency will not undergo any change as part of the Ordering Task.

Financial mechanisms

Ms. Wilson, also explained during the Mesa Redonda broadcast, that as part of the Tarea Ordenamiento, an exchange rate of one CUC for one peso will be applied for Central State Administration, the Popular Power agencies, the state budgeted companies, and other legal entities.

On the other hand, an exchange rate of one CUC for 24 pesos will be applied to non-agricultural cooperatives, institutions that do not receive convertible pesos from the state, embassies, airlines, press correspondents agencies, and religious institutions.

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Wilson also addressed the bridge loan mechanism, which aims to support the functioning of the economy during the first stage of regulation. She explained that this loan aims to finance the salary, working capital, and investments of the business system.

Assistance to businesses

The Minister-president said that legal entities can obtain a bridge loan up to 90 days after January 1 and can request it from this Tuesday to cover the salaries. She added that the loan will mature in 150 days, although banks can give companies a 30-day extension. Wilson pointed out that this credit will be granted for production or services destined for exports, productive chains, infrastructure development, and investments that are more than 50 percent.

The bank will also assume the debts of the entities with the addition of a contract that establishes the obligation to pay through an off-balance account, said Ms. Wilson.

Banking operations increase

The First Vice President of the Central Bank of Cuba, Francisco Mayobre, confirmed during the Mesa Redonda show that the Tarea Ordenamiento has a strong impact on banks and financial institutions whose operations have increased by more than 70 percent.

To respond to the demands of the population in this new stage, it was decided to extend banking hours, which will provide services 11 or 12 hours a day, the official reported.

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Mayobre also said that as of Monday, the ATM configurations that are located in bank offices will be changed, so they can have banknotes in pesos of all denominations, in line with what the new monetary unification demands.

He added that these changes will speed up the payments to pensioners who collect the pension payments through a magnetic bank card.

Mayobre confirmed that the payment of thousand pesos, on December 17, is guaranteed for all pensioners.

Bank branches will have two holidays

He explained that until December 31, only CUCs can be withdrawn from the ATMs located at bank branches, and as of January 1, they will dispense CUP.

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Mayobre added that in order to update the banks’ automated system and adapt it to the exchange and monetary unification which the ordering task entails, they will not be open to the public on December 30 or 31.

He stressed that in the case of electronic payment such as Transfermovil and Enzona, they can only be used until the 30th at 6:00 p.m. and they will restart their operations at 00:00 on January 1.

The CUC will end circulating

As of January 1, the CUC will begin to be withdrawn from circulation. People will not be able to withdraw it from banks, but must exchange them for CUPs, said Mayobre.

He explained that in order to address the concerns of people, a call center has been set up that can be reached by calling 78 69 8530 or emailing:

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Marta Wilson stressed that from 6:00 pm December 30, no money can be withdrawn from the ATM, or electronic payments can be made until :00 on January 1. She also clarified that the bank accounts in CUP have no relationship with the ordering task and, therefore, will maintain the same interest rates.

Not everything will change at the Bank

Ms. Wilson explained to the TV audience of Mesa Redonda that the credits granted during the ordering task will not have any variation and they maintain the payment dates and interest rates.

In regards to the cadecas, she said that during the first six months of the year they will continue to change the CUC per CUP and later will continue to provide currency exchange services freely convertible to Cuban pesos and vice versa, therefore they will not disappear.

She answered questions from people about MLC accounts that have no balance and pointed out that they will not be closed even when people have not been able to make a deposit.

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In the case of the CUC cards that customers have in their possession, Ms. Wilson said that they may continue to be used, but as of January in CUP.

New banknotes to circulate

From the establishment of the exchange rate of one for 24 and the start of sales in the CUP chain store chains, it was decided to issue notes of 1,000, 500 and 200 pesos, reported Marino Murillo, the Head of the Permanent Commission for the Implementation and Development of the Guidelines at the Mesa Redonda. He explained that a strategy had been adopted to distribute these bills to the ATMs, taking into account the environment where each of them is located.

Murillo stated that despite the existence of a program designed so that people can extract their money in the bills they need, there may be some problems that must be solved by the responsible entities. He announced that tomorrow they will report on the impact of the Tarea Ordenamiento on all actors in the economy and actions in domestic trade, to be broadcast on the Mesa Redonda.

This article was first published on Radio Reloj and has been translated by the staff at Cuba Business Report.

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