Cuba has reportedly banned its small businesses from using US bank accounts, just weeks after the Biden administration allowed Cubans to use the banking system.
Havana’s decision comes as the country is experiencing its worst economic crisis since the collapse of the Soviet Union and facing inflation that hit 31% last year, Bloomberg reported Friday (July 26).
According to the report, Cuba intends to keep dollars at home.
Now, the government says all payments to international suppliers must be made through local banks, Bloomberg reports.
The move is part of a Cuban government crackdown on the private sector, the report said.
Cuba began allowing the creation of small to medium-sized businesses (SMEs) in 2021, and more than 11,000 such businesses have been formed since then, the report said.
Entrepreneurs interviewed by Bloomberg said many small businesses need offshore accounts because they can’t get hard currency in local markets, and some believe the government wants to drive them out of business.
The Biden administration announced new regulations allowing Cuban entrepreneurs to open bank accounts in the United States in May, aimed at supporting the growth of the country’s private sector, the New York Times reported at the time.
It marks the first time Cuban businessmen have been allowed to open US bank accounts amid a long-standing US embargo on the country, the report said.
Announcing the amended regulations in May, the Treasury Department said in a press release: “These regulatory amendments update and clarify authorizations in support of internet-based services to promote internet freedom in Cuba, support independent Cuban private entrepreneurs, and expand access to certain financial services for the Cuban people.”
In an earlier attempt to address the impact of Cuba’s economic crisis, Cuba’s Central Bank issued a regulation in August setting a 5,000-peso limit on cash transactions between state-owned and private businesses and prohibiting those organizations from using ATMs.
These measures are aimed at encouraging the use of electronic payment methods, targeting runaway inflation and the large non-book economy that has developed amid the country’s economic crisis.
