- The government of Cuba has partially formalized de-dollarization through new foreign-currency regulations aimed at stabilizing the economy.
- The measures restrict access to the US dollar, allowing only selected firms to conduct foreign-currency transactions.
- Critics warn the policy could increase corruption and undermine trust in the banking system, pushing activity into the black market.
- Previous attempts at de-dollarization in Cuba have failed, and skepticism remains about the current plan’s effectiveness.
The government of Cuba recently introduced new regulations to partially formalize de-dollarization. These measures establish rules governing foreign-currency transactions, bank accounts, and access to currencies, focusing largely on the US dollar. The aim is to stabilize the country’s economy amid ongoing challenges, as the US dollar remains the most sought-after foreign currency in Cuba.
The policy explicitly targets control of the US dollar’s circulation. It limits currency access to a small number of government-approved companies. This concentration of control has raised concerns that the government may use these mechanisms to dominate the foreign exchange market. Some critics argue the policy seeks to politicize remittances rather than address deeper economic structural issues, as outlined in the new foreign-currency regulations.
Since access is restricted, many businesses outside the favored group may face disadvantages. This selective currency allocation could enable corruption by giving government insiders preferential treatment. Trust in Cuba‘s banking system is already low due to past corruption, and US dollar deposits were often not respected by banks. These factors have driven many to the informal or black market, where the US dollar remains more valuable.
This approach to de-dollarization is not new for Cuba. Similar attempts have been made since the 1990s without significant success. The public continues to view such efforts with skepticism. The current partial de-dollarization policy may encounter difficulties and could unintentionally reinforce the informal foreign exchange sector.
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