14ymedio, Havana, 1 September 2023 — “I sell 5,000 CUP in cash for a [digital] transfer. Best offer,” says a Cuban on social networks, where in recent weeks a new market has been created for the purchase and sale of pesos for pesos that the Central Bank of Cuba (BCC) has already placed outside the law.
The “bankarizedo” or virtual peso has became a last resort for Cubans, as a result of the decision by the authorities to cause a shortage of banknotes and replace them with electronic transactions, in order to gain greater control over the national currency. With this measure, the country leaves the one peso-one CUC monetary duality in exchange for another: cash peso-virtual peso, with different values. The dollar has been consolidated as a reference currency, while its official remedy, the MLC (freely convertible currency), has gradually been devalued.
Questioned by the official newspaper Granma about the bancarización* banking reform process announced almost a month ago, the vice president of the BCC, Alberto Quiñones Betancourt, referred to “illegal behaviors that are happening,” including those caused by people who “offer cash for a greater amount by transfer.” This activity, the official said, violates Resolution 111, which “establishes that all channels must be on an equal footing at the time of making the payment.”
But the reality is that the currency has become so coveted that even the sale of dollars is only made in exchange for cash pesos, the magic word of these ads
But the reality is that the currency has become so coveted that even the sale of dollars is only made in exchange for cash pesos, the magic word of these ads. There are plenty of examples: “I sell 200 dollars for 230 CUP in cash.” “I buy dollars at 210. I have CUP in cash.” “I sell 150 dollars for 200 CUP. Payment in cash.”
Also growing is the number of private businesses that reject payments by digital transfer, claiming that subsequently “they can’t take the money out of the bank.” In a recently remodeled cafeteria on San Lázaro Street, in Central Havana, the employee is categorical: “We are only accepting cash in pesos, dollars or euros,” she responds to customers who try to pay with a Transfermóvil debit card.
In order not to incur a violation of the stipulations of bancarización, the clerk says that they have problems with the Transfermovil account and now “it’s not working,” a justification that is repeated in other nearby businesses. But behind the scenes, the explanation for the rejection of the “virtual peso” is that “we still have to buy many of the inputs and raw materials in cash.”
Agricultural markets, the main sources of vegetables, fruits and grains, continue to operate mostly through cash payment. “The avocado, the mango and the salads we serve, all that has to be paid for with real bills, not transfers,” explains the employee. “What can we do with the peso in the bank if, at the time of buying, they only accept it cash in hand?”
The situation has reached a point where the digital media El Toque, which for years has published the exchange rate of the informal market of the main currencies circulating in Cuba, has begun to include the virtual peso currency for the cash peso. The first day it did, on August 23, the price of 1 Cuban peso in cash was 1.10 to the digital peso. This Friday, the price is 1.13.
The reaction to this new exchange rate has been frenzied. Last Monday, Granma, the Communist Party newspaper, published an article accusing the United States of trying to influence the Cuban economy by manipulating the prices of the national currency through the El Toque website, pointing it out as “the voice of everything that serves the counterrevolution.”
“The strategy cooked up in the United States to strangle the economy of the Cuban family adds a new manipulation tool, based on the short-term limitations with the availability of national currency in cash,” accuses the text, which denounces the “eagerness to add anxiety to the other opportunistic manipulations of the exchange values of the MLC, the dollar and the euro.”
The regime denounces the “eagerness to add anxiety to the other opportunistic manipulations of the exchange values of the MLC, the dollar and the euro”
The article – according to the Cuban economist Pedro Monreal – is “incorrect,” since “it is based on the absurd premise that the measurement of the informal exchange rate in Cuba is manipulation and not a necessity. What El Toque does, like anyone who would want to estimate the informal rate, is compensate for the official disinterest,” says the expert. In his opinion, the work done by El Toque “fills the official information gap. There is an informal foreign exchange market because the official rates for the peso are overvalued,” he argues.
Meanwhile, in the currency buying and selling channels, the dollar and the euro are also experiencing their particular “adventure,” in this case an abrupt fall from the prices they had reached in previous weeks. After reaching nearly 250 pesos for a dollar, the informal currency market moves around 210, according to El Toque, but there are more and more offers on networks with prices that can reach up to 190 or 200 CUP for the US currency.
“This could be a perfect State Security operation,” says Carlos, a regular of online currency trading operations who suspects that the regime is also trying to influence the price of the black market by simulating an unreal depreciation. But sellers are suspicious: few are willing to sell their precious dollars at a rate that could multiply in another day.
Translated by Regina Anavy
*Translator’s note: “Bancarización” is term used in Cuba and other Latin American countries that refers to government efforts to reduce the role of cash through a greater reliance on banks’ digital payment options. The term does not seem to have a counterpart in English so the Spanish term is used throughout this translation.
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