Cuban Government Expands Dollarization
Allows private businesses to accept foreign currency in cash
The new regulation eliminates the prior authorization required to open accounts abroad and eases restrictions on financial transactions with foreign countries.
HAVANA TIMES – The Cuban Government took another step toward dollarizing the economy on Thursday by authorizing private economic actors to accept cash payments in foreign currency and deposit them directly into their bank accounts. The measure is part of a new package of regulations that removes several restrictions on transactions involving foreign currency.
One resolution from the Central Bank of Cuba and another from the Ministry of Economy and Planning, are aimed at regulating foreign-currency bank accounts and the system for managing, controlling, and allocating foreign currency in the economy. Both replace provisions adopted late last year.
One of the main changes directly affects private businesses, cooperatives, agricultural producers, artists, creators, and other private economic actors. From now on, their foreign-currency accounts may receive cash deposits derived from legitimate income generated by their own economic activities.
One resolution goes even further, establishing that private actors may accept cash payments in foreign currency “at the customer’s discretion.” That money may be deposited into foreign-currency accounts or converted into Cuban pesos at the exchange rate in effect.
In practice, the change expands the spaces in which the dollar and other foreign currencies can legally circulate within the private economy, even when an establishment does not formally operate as a retail business authorized to sell exclusively in foreign currency.
The new rules also allow private businesses and individuals to withdraw foreign currency in cash from their accounts, although this will be subject to the “availability and commercial policy of the banks.” Thus, the ability to withdraw dollars, euros, or other currencies will ultimately depend on whether the financial institution physically has them available.
Another significant change is the elimination of the Central Bank’s prior authorization requirement for opening foreign-currency accounts. It now establishes that individuals and legal entities may open such accounts directly at banks without first obtaining the institution’s approval.
The Government is also easing restrictions on international transactions. Private actors will be able to use their accounts to make payments abroad for imports of goods and services, financing, and other lawful purposes related to their economic activities.
The new wording does not expressly mention the obligation to make such payments through authorized importing companies, although it does not in itself amount to a complete liberalization of imports, since transactions must still comply with all other legislation currently in force.
Even more significant is the possibility of maintaining accounts abroad. A resolution establishes that economic actors covered by the regulation may open accounts both in Cuba and outside the country without prior authorization. In the case of foreign accounts, they will only be required to notify the Central Bank and the National Tax Administration Office.
The possibility of operating accounts abroad also raises questions about the payment methods private businesses may be able to use. Since June, Visa and Mastercard cards have stopped working in Cuba after the foreign bank that processed those transactions severed ties with Fincimex, the financial company linked to the military conglomerate Gaesa. The new regulation could make it easier for a private company to seek international payment-processing services linked directly to an account abroad, without necessarily going through the Cuban banking system.
However, having an account outside the Island does not turn a Cuban establishment into a foreign business for Visa or Mastercard purposes. Both networks take into account where the business actually operates and, for in-person transactions, the country where the payment is made. Therefore, the new regulation does not in itself mean that those cards will return to Cuban payment terminals.
The possibility also remains for professionals who export services through state entities to receive foreign currency directly into their accounts, in accordance with the terms of their contracts.
The paradox is once again written into the legislation itself. While the authorities insist that they want to restore the Cuban peso to the center of the monetary system, the new rules expand the range of businesses, accounts, and transactions in which it can be dispensed with.
First published in Spanish by 14ymedio and translated and posted in English by Havana Times.