2023-08-12 06:18:59
Havana, Aug 11 (EFE).- Bancarization in Cuba –announced last week– moves on a fine line between what is “necessary” and a “banking corralito”, according to experts warned EFE, who predicted the interruption of some private businesses, an increase in dollarization and problems for vulnerable people.
The measure, as reported by the Central Bank of Cuba (BCC), will prioritize electronic payments to minimize cash, used in the country both among individuals and companies.
In addition, the announcement was made at a time when no less number of ATMs on the island do not have tickets. A few days ago, the BCC itself also stressed that these have a significant level of obsolescence.
The BCC also explained that the ATM network can only use pensioner cards, savings accounts, salaries and bonuses.
The central bank gave a period of six months to create the conditions to carry out the banking process.
One of its most controversial aspects is the limit on cash operations by companies, which will be 5,000 Cuban pesos (cup) -about 42 dollars at the official exchange rate-.
The president of the BCC, Joaquín Alonso, said on state television that bank access will be “gradual” and stressed that this does not mean that cash will disappear.
The Government defended the provision as “necessary, modern” and that it “will benefit the majority of the population,” according to what was revealed at the last meeting of the Council of Ministers headed by the president, Miguel Díaz-Canel.
BANK PEN
“Bankarization is a euphemism to refer to something that Argentina already coined in the 2000s as a banking corralito when the crisis, then Greece did it and now Cuba in the face of the serious financial and economic crisis,” Cuban economist Tamarys Bahamonde explained to EFE. .
The PhD candidate in Public Policy and Public Administration at the University of Delaware (USA) stated that the measure “does not solve the real underlying problem: the structural deformation of the economy, sustained by the scarcity of supply, a system inefficient production and high inflation.
For Bahamonde, the origin of the government’s decision could be in the extraction limits set at the beginning of the year: 80,000 cups per day (666 dollars) and a maximum of 120,000 pesos per month (1,000 dollars).
After that, many Cubans stopped keeping their money in the bank and “it reduced the amount of the Bank’s cash reserves and led to the corralito,” he considered.
THE VULNERABLE
In statements to EFE, the Cuban economist Omar Everleny defended the measure adopted by the insular Executive but warned that “the conditions have not been created: electronic commerce is useful, but the Cuban population arrived late to this process and a large part of it -very elderly – is not familiar with the use of transfermóvil (mobile banking) or enzona (electronic commerce platform)”.
Bahamonde, meanwhile, said that the reduction in cash affects “the most vulnerable” and those who “do not have a smart cell phone; we are talking about elderly pensioners who do need the cash”.
Cuba is one of the oldest countries in the region. 21.6% of islanders were over 60 years of age at the end of 2022, according to official data.
THE PRIVATE
Small and medium-sized private entrepreneurs supply -with difficulties- a very depressed market due to low national production (Cuba imports 80% of the food it consumes) and demand foreign currency to import the inputs they need.
The Cuban currency is quoted at an official fixed rate of 120 for each foreign currency, but its sale limited to 100 dollars in state exchange houses opens the door to the informal market, in which each green bill is equivalent to 240 cups.
In this scenario, Everleny foresees that banking access will cause “a cut in private sector imports and with it, more deficiencies because they need cash to buy supplies abroad.”
For his part, Bahamonde envisions a “disruption” in his operations because they move hundreds of thousands of pesos that cannot be made through electronic transfers.
The independent economist Óscar Fernández predicts a “severe reduction in the supply of private imports, seeing that it is impossible to close the cycle, given the absence of a “banked” exchange market.
Fernández mentioned on social networks that the most dangerous thing is that banking “will strip the cup as a unit of account and a means of hoarding.”
A function that, in his opinion, the dollar will occupy: “financial digitization is not going to get the Cuban peso to recover its monetary functions.”
In this line, the economist Pedro Monreal argued on Twitter that banking access will limit the circulation of cash. But he warned that “by itself it will not prevent the deterioration of basic functions of the national currency and therefore opens spaces for dollarization (currency substitution).”
Bahamonde reiterated that “any measure in the financial and monetary system will be a patch” and indicated that the measure announced by the Government “reduces confidence in the Cuban economy.”
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