Cuban Authorities Blame the Failure of Banking Reform on Hard Currency Sellers

Two money counting machines, a ’motorina’ [electric motorbike] and a dozen magnetic cards were seized from the woman. (Escambray)

14ymedio bigger14ymedio, Havana, 27 October 2023 —  After turning a blind eye for decades to street currency sellers, the authorities have decided that this activity “hinders” the bancarización* [banking reform] decreed by the Government last August. On Friday, the official press reported a police raid in Sancti Spíritus against an “illegal cadeca” (exchange house run by individuals). Those involved could be fined or punished with between two and five years in prison.

The Escambray newspaper, concise in its report, hides the names of the accused and the date of the events. The media describes the police search of a woman from Sancti Spiritus who used her home as an illegal currency exchange. According to the authorities, the citizen used social networks as a means of contact with her clients, to whom she gave foreign currency in exchange for pesos or vice versa, charging three pesos for each dollar or euro that she sold.

The seizure could have taken place at least a year ago, since the photos published by the provincial newspaper show the exchange of one dollar at 180 pesos, compared to the current rate, which is 255. This has been confirmed to 14ymedio by several citizens of the province, who insist that they have not had news recently about an operation of this type.

“If that had happened these days, everyone would have found out,” explains David, a professor from Sancti Spiritus. “It seems more like a tactic to scare MSME* owners and dollar exchangers into following the rules of banking,” he adds.

I don’t understand what the problem is, if everyone knows that as soon as people get money from Cadeca [official currency exchange] they go to these resellers

Luis, another resident of the main city, has similar opinions. “I don’t understand what the problem is, if everyone knows that as soon as people get money from Cadeca [official currency exchange] they go to these resellers. I imagine they do these things to justify the failure of banking, which couldn’t get worse,” he argues. “Most likely it’s an old case and they’ll pull it out now.”

Accused of “illegal trafficking in national currency, foreign currency, metals and precious stones,” the accused operated with several cards in her name and those of other people, which she used to withdraw “large amounts” of cash from ATMs. According to the oficial press, this “hinders the true purpose of banking” and constitutes a violation of “socialist legality.”

According to the authorities, a man also involved in the business was detained during the operation while carrying a backpack with about 143,000 pesos (less than $600 in the parallel market). “The individual recognized that said cash had been withdrawn from an ATM after a transfer made by the alleged victim,” the newspaper states.

Two machines for counting money with the available digital records were also seized from the woman, about 10 magnetic cards, a motorina [electric motorbike], large amounts of cash in different denominations — although the media does not specify how much it was mostly pesos, US dollars and euros — as well as an account book containing transactions made to clients.

The authorities also revealed that the woman frequently visited the homes of her clients, some of them regulars, “MSME representatives and “self-employed workers,” two of the sectors most suffocated by the new virtual transaction policy.

The authorities also revealed that the woman frequently visited the home of her clients, some of them regulars, “MSME representatives” and “self-employed workers

“Not even the current process of banking was an obstacle, because she had a dozen magnetic cards to circumvent the mechanisms imposed by the Central Bank of Cuba, and if, as a result of illicit financial activity, she emptied the occasional ATM, bad luck for those who came behind in the line,” declares Escambray. Clearly, for the newspaper, the real crime is not the illegal exchange rate, but rather avoiding the unstable economic policies of the Government.

Since 1968, when Fidel Castro banned the circulation of the dollar on the Island – with serious consequences for those who possessed them – currency resellers began to become increasingly common in Cuba.

The decriminalization of the dollar did not come until 1993, and a decade later the CUC (Cuban convertible peso) appeared, which forced a more flexible business, no longer dependent on both foreign currency and local currency. Although raids were carried out from time to time, people engaged in this business began to group together in enclaves in each city, easily identifiable by the population.

Touts, mostly young men, learned to trumpet exchange rates in English, French and even Russian

This is the case on Neptuno Street in Havana, where touts, mostly young men, learned to trumpet exchange rates in English, French and even Russian. Or Parque Vidal, in Santa Clara, where they gather, without fear, in front of the official Cadeca. In this way, whoever leaves the Western Union office in the capital of Villa Clara quickly finds someone to exchange their dollars.

The recent bancarización, as well as the disappearance of the CUC almost three years ago as one part of the so-called Ordering Task***, has changed the rules of the game for currency resellers. If before the raids were carried out sporadically and to keep them under control, now the State’s need to collect foreign currencies at all costs makes the persecutions more frequent.

The business, however, survives, and has moved to social networks, taking advantage of platforms such as Transfermóvil and EnZona to “schedule” transfers. Another common way, for those who have immersed themselves in the world of cryptocurrencies, is the exchange of pesos for the virtual equivalents of the dollar or the euro, a practice that the State has also begun to pursue but without much success.

Translator’s notes:

*Bancarización— banking reform –in effect since August 3, 2023,  is a set of measures intended to move Cuba to a “cashless” society based on electronic banking.  So far, the fast-falling peso, soaring consumer prices, the inability of the Island’s infrastructure — subject to constant blackouts — to support required elements as simple as ATMs, along with widespread distrust among the population, have stymied the effort.

**MSME — Literally, “Micro, Small, Medium Enterprise.” The expectation is that it is also privately managed, but in Cuba this may include owners/managers who are connected to the regime.

***The “Ordering Task” [Tarea Ordenamiento] was a collection of measures that include eliminating the Cuban Convertible Peso (CUC), leaving the Cuban peso as the only national currency, raising prices, raising salaries (but not as much as prices), opening stores that take payment only in hard currency which must be in the form of specially issued pre-paid debit cards, and a broad range of other measures targeted to different elements of the Cuban economy. 


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