Central Bank of Cuba allows the island’s non-residents to open US dollar bank accounts

Central Bank of Cuba allows the island’s non-residents to open US dollar bank accounts

HAVANA, May 27th The Central Bank of Cuba (BCC) issued a resolution that allows the island’s non-residents to open bank accounts in U.S. dollars, to buy in stores created by the government since last October that sell products in this currency.

Sources from the legal section of the BCC explained  that Resolution 73/2020, published days ago in the Cuban Gaceta Oficial, eliminates the condition of the person’s permanent residence, both for making such purchases and for importing products through entities authorized by the Ministry of Foreign Trade and Investment.

This is the novelty, according to BCC sources, with respect to a previous resolution of October 2019, which allowed the creation of these dollar accounts only for permanent residents on the island and which was repealed by the new regulations.

The drafting of the new resolution, reported this Tuesday by the Agencia Cubana de Noticias news agency, has created confusion as to whether, as of now, it will be possible to pay using the debit cards for these dollar accounts in any establishment of the chains of stores in currencies that operate on the island.

In its first, Therefore, the regulation provides for the use of U.S. dollars in retail sales operations in foreign currency, although it does not specify what type of stores, so several independent media from outside Cuba have published that the Cuban government has given “green light to the payment in dollars in all the stores operating with Cuban currency.”

Some economists have also echoed this interpretation of the text, in the sense that the regulations point to greater dollarization of the Cuban economy.

However, although both the new resolution of the Central Bank of Cuba and the one repealed leave room for interpretation on the scope of the measure, the truth is that they are almost identical in what they stipulate.

Such similarity includes the aforementioned use of U.S. dollars in foreign currency retail sales, which until now has only resulted in the opening of new stores for the specific sale in this currency and not in an extension of its use in the rest of the stores in foreign currency.

They also agree that bank accounts in dollars “are operated by debit cards, which can be used to carry out transactions in U.S. dollars, Cuban pesos, and convertible pesos in ATMs, point-of-sale terminals and other payment channels” and in that they can receive funds “by means of bank transfers from abroad in any freely convertible currency; bank transfers from other accounts in the freely convertible currency that operate in Cuban banks; transfers from FINCIMEX S.A. for remittances, and through cash deposits.”

These deposits, detailed in both resolutions, can be made in U.S. dollars―in which case the 10% tax established in Cuba for this currency is applied―euros, pounds sterling, Canadian dollars, Swiss francs, Mexican pesos, Danish crowns, Norwegian crowns, Swedish crowns and Japanese yen.

In this sense, the new resolution, instead of establishing new provisions on these aspects, ratifies those of the previous regulations.

Last October, the Cuban government established the opening of dollar stores, after 15 years of the elimination of sales in that currency in retail commerce, and at a time when the island was going through an energy and economic crisis reinforced by measures of the Donald Trump administration.

Home appliances such as flat-screen televisions, refrigerators and air conditioners, as well as electric mopeds, parts and auto parts, among other merchandise, have been marketed since then in dozens of establishments created throughout the island.

With the measure, the island’s government seeks to prevent the flight of foreign currency and boost the weak Cuban economy, lacking liquidity and compromised by the debts and sanctions of the United States government, which has increased the embargo on the island.

Payment for purchases and imports through state institutions, in accordance with the regulations of the Cuban authorities, are not made in cash but only through debit cards, both national and international accepted on the island.

Starting in February of this year, the government’s strategy to attract foreign currency also included the sale of second-hand cars at a dealership located in Havana, at significantly high prices.