Central Bank to reduce further cash in circulation, make banking more effective

15 April 2024

 Cuba’s Central Bank (BCC) has said that it hopes this year to reduce further the amount of cash in circulation and make more effective measures announced last August that seek to direct state and non-state enterprises and individuals to use banks and magnetic cards for most transactions. 

The policy limited cash withdrawals to CUP5,000 per transaction, required the payment of all salaries, pensions, and benefits to be by electronic means, and sought to encourage all future economic activity to be e.commerce based. (Details Cuba Briefing 4 September 2023). 

 The measures formed a part of a response to surging inflation in both the official and unofficial economy, and an ongoing government liquidity crisis. 

Speaking at this year’s just held annual audit meeting of the BCC, Julio Pérez, the Director General of Operations and Payment Systems, said that at the end of 2023, 91% of state entities and 74% of non-state forms of enterprise undertook their accounting activity through current accounts, but 30% of transactions still took place in cash compared to 68% carried out by electronic channels. 

 This was due in part, he said, to the obsolescence of technological equipment, including the country’s 800 ATMs “of which, on average, 77% dispense cash.” The meeting also heard that despite the measures introduced in 2023, the amount of cash outside the banking and financial system continued to grow “based on the presence of new actors in the national economy.” This group, it emerged are now permanently monitored by the BCC in relation to government’s macroeconomic stabilisation programme introduced in December. 

Among the other problems BCC officials identified in moving to a near cashless society is the continuing resistance to making and receiving payments by electronic means by many smaller mainly non-state providers of goods and services, “inadequate control measures” to ensure compliance by regulatory bodies, the availability of cash at banks, and the variable levels of service offered. 

Speaking at the BCC meeting, Cuba’s Prime Minister, Manuel Marrero said that additional incentives must now be sought to stimulate cash deposits in the country’s banks and an improvement in the quality and provision of services were required. He also stressed the centrality of the BCC to the 2 

implementation of the country’s macro-economic stabilisation programme, to monetary policy, as well as to the elimination of exchange rate duality, and the technically illegal informal exchange rates widely used by most Cubans to change convertible currency. 

Although there was no reported discussion about the steps Cuba might take to address the ever-widening gap between its two official exchange rates and the still surging street rate for the US Dollar and the Euro, the Minister President of the BCC, Juana Delgado, told the meeting that work is being done on “resizing the exchange market,” and that this year the BCC will identify projects that generate external income and promote the improvement of the flow of foreign currency to the country. The bank, she said, would additionally focus on expanding the Cuban banking and financial system’s international relations. 

In her reported remarks, Delgado stressed that the BCC would this year seek to consolidate the banking process so that it involved the full participation of Cuban society, by engaging with “the providers of goods and services, regulatory authorities, local governments and non-state forms of management (MSMEs).” 

Other planned actions, Delgado indicated, focus on standardising electronic payment systems nationally on all platforms, the design of new strategies which reduce the use of cash in transactions to stimulate deposits, and the adoption of measures that increase the availability of cash. 

The BCC would also, she said, seek to attract new financing with an emphasis on enhancing the activities of Cuba’s export sector, create a new mechanism for the allocation and management of liquidity for all economic actors, and introduce measures that recover remittance flows. No details were provided.