14ymedio, Madrid, April 8, 2024 — ‘Bancarización’* — banking reform — is stagnating in Cuba despite the many hours spent promoting it in the official media. Last year, 30% of banking operations were carried out in cash, despite the fact that only 77% of the 800 ATMs on the Island dispense it, according to data offered by the Central Bank of Cuba (BCC).
In a meeting held this Saturday attended by Miguel Díaz-Canel and Manuel Marrero, the banking authorities explained that at the end of 2023, 91% of state entities and 74% of “non-state management forms” maintained accounting activity in their accounts.
The insistence on getting the vast majority of operations to be carried out electronically has made an important advance, since 68% of them did so. However, this is not enough for the goal set, said Yamile Berra Cires, first vice president of the BCC, who explained that there are still problems.
Some 91% of state entities and 74% of the “forms of non-state management” maintained accounting activity in their accounts
Among them, she cited the resistance on the part of suppliers of goods and services to execute collections through electronic payment channels, inadequate organizational and control measures by regulatory entities and economic actors who do not regularly deposit or use their personal bank accounts for the economic activity of their businesses.
In August 2023, the BCC approved several provisions to promote bancarización in the face of the shortage of banknotes in the country. Among them, cash withdrawals were limited, and all economic actors were forced to offer an electronic means of payment to customers, which in turn would result in greater control of operations and reduction of fraud.
The resistance of the population is verified in the operations quantified by the BCC at Saturday’s meeting, to which the uncontrollable – and very high – amount of those produced in the informal market should be added, which would drastically reduce the official data.
The meeting was also a review of all the initiatives that the entity should have to boost the economy and “correct the distortions,” but according to the official press, there is no concrete measure.
The meeting was also a review of all the initiatives that the entity should have to boost the economy and “correct distortions”
Marrero indicated that “additional incentives should be sought to stimulate cash deposits in the country’s banks, improve the quality and provision of services, ensure the mechanisms for the collection of foreign exchange, seek external financing and increase the appreciation of risks in the face of cyber attacks.”
It remains to be known how the BCC plans to put the plan into practice, although a reader of Cubadebate says citizens could regain confidence in the system. “Start by establishing, and I’m not saying ’recover’, RELIABILITY in the banking system. Remove RIGHT NOW the limitations to the amount of money that can be deposited and the unnecessary tax on deposits; and the limits on the monthly amount of money that can be transferred and the amount of money that can be withdrawn… All that and more has upset the customers. And the money will flow towards the banks, which is what they were invented centuries ago.”
Start by establishing, and I’m not saying ’recover’, RELIABILITY in the banking system. Remove RIGHT NOW the limitations on the amount of money that can be deposited and the unnecessary tax on deposits
Juana Lilia Delgado Portal, minister president of the entity, also exposed a list of wishes to be fulfilled in 2024, among which the priority seems to be looking for projects that increase income abroad to capture foreign currency, as well as “implementing a new mechanism for the allocation and management of liquidity.” Nothing about this is clear either.
Another priority is the recovery of remittances, which have plummeted in recent years in a scandalous way. Last year, emigrants sent just under 1.973 billion dollars to the Island, 46% less than in 2019, when 3.716 billion were captured, according to the NGO Cuba Siglo 21.
In 2020, Donald Trump’s Administration made the decision to sanction the entities that negotiated with Fincimex, the Cuban military bank. As a result, the main remittance shipping company, Western Union, decided to suspend services to the Island until the regime found a way to circumvent sanctions in the Orbit company. Although money is circulating again – with difficulties, such as the suspension in 2024 for an alleged hack of Fincimex – the volumes are no longer the same, and there are many Cubans who resort to unofficial channels, such as Zelle, to send money.
In many countries, the Central Bank is the key institution of macroeconomic policy. This is not the case in Cuba. The BCC will “accommodate” – with unbacked liquidity – the level of fiscal deficit ordered”
The BCC also mentioned its priority of “resizing the foreign exchange market,” a task entrusted to it by the leadership at the end of the year, but, as economist Pedro Monreal has pointed out on several occasions, the entity lacks independence and does not use the most “powerful” mechanism that analogous institutions usually use, such as the interest rate.
“In many countries, the Central Bank is the key institution of macroeconomic policy. This is not the case in Cuba. The BCC will “accommodate” – with unsupported liquidity – the level of fiscal deficit ordered,” he said this February.
*Translator’s note: Bancarización is a term used in Cuba and other Latin American countries referring to reforming the banking system. All economic transactions will be made by debit card, including cash withdrawals and the payment of salaries. The term does not have a counterpart in English so the Spanish term is used throughout this translation.
Translated by Regina Anavy
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