Why Cuba keeps the decision to burden the US Dollar?

Why Cuba keeps the decision to burden the US Dollar?

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Because our reality is unique, because the great daring decision of not giving in to the threats of the world’s most powerful empire has turned into a question of principles for us, and because the economic sovereignty maintains the total independence we fight for, being thus the path to Cuba’s development like any other.Because our reality is unique, because the great daring decision of not giving in to the threats of the world’s most powerful empire has turned into a question of principles for us, and because the economic sovereignty maintains the total independence we fight for, being thus the path to Cuba’s development like any other.

The fight of this island for consolidating a sustainable progress, is the most similar to a battlefield, and those who still think about the US blockade as a political excuse, are just highlighting either an incredible innocence or a tremendous ignorance.

The blockade is a war act and the self-defense to resist it is a legitimate right.

In such principle, the sovereign decision of 2004 is based on, establishing then a burden of 10% to all the US dollars in cash entering the national bank system, as a response to the prohibition of operating with such currency in foreign banks. 

So far Cubans were not so concerned about the USD burdening, due to the predominance of the national currency (CUP) or the convertible peso (CUC) used in the commercial operations by natural people at the Cuban stores and markets.

However the government recently approval of a package of economic measures which included the authorization of retail stores to sell products to the people in foreign currency and paying with cards associated to accounts with these purposes, has generated a wide range of enquires about the relevance of such burden on the American currency.

With the purpose of recalling the causes that motivated the decision in 2004, explaining the level of validity of the measure in relation with the current economic persecution of the Cuban trade in the world and explaining how this way still protects the Cuban commercial operations from extra risks, Granma refers some answers offered by the Central Bank of Cuba about such topic.

  • Which were the causes that originated the government measure of establishing a burden of 10% to USD in cash?

The USA government, as part of its aggressive policy against our country, intensified threatens and measures towards foreign banks in order to stop Cuba could deposit the USD cash in banks abroad. Money paid by the tourists or people in the Cuban market that used to operate then in US dollars.

USD currency deposits in foreign banks are essential to comply with the commercial obligations of the country and because the goods imports are not paid in cash, but through bank operations with available funds in different foreign banks.

When dollars are received in bills, to be used in international transactions, Cuba must send them abroad to banks willing to receive them and this implies high risks and additional costs.

Then, as an answer to such actions of blocking the Cuban external financial flow of funds, The Central Bank of Cuba issued the Resolution 80 from October 23, 2004, aiming to discourage the USD cash entrance to the bank and financial system of Cuba.

Burdening those bills that would enter the country could fulfill two objectives: to compensate the costs and risks associated to the physical movement of themselves to abroad, under the conditions of the blockade intensification and economically motivate those people wanting to pay money into a Cuban bank account or by means of other foreign currencies with no restrictions such as Canadian dollars, euros, sterling pounds, Swiss francs and others.

  • Why are just burdened the USD cash?

To discourage only the entrance of this specific currency

  • Are bank transfers in USD received from abroad burdened?

No they aren’t, because bank transfers are not associated to the already mentioned costs and risks caused by the physical handle of the USD cash, so they are not required to be burdened.

  • Are the bank operations with international cards burdened?

Bank operations associated with magnetic cards are no burdened with the 10 % .Magnetic cards such as Visa or Mastercard which are not issued by American banks are accepted in Cuba.

  • Why is it necessary to keep the burden to the USD cash?

In the last few years, the USA government has intensified its economic war against the Cuban people, dictating new measures that cause significant damages and create serious risks for the normal exercise of the international financial activity. The trend of foreign banks and financial institutions to refuse operations with Cuban banks is increasing more and more.

The Central bank of Cuba, in different information programs and public analysis ,has reiterated that the burden established for USD cash operations has been and continues being an evaluation issue and permanent attention of the bank system and the Cuban government authorities.

  • Negative effects on the finances caused by the US blockade against Cuba.

*Among the main legislations of the Congress and administrative dispositions establishing the policy of the blockade against Cuba are the prohibitions to any natural person or legal entity from the USA or third countries, to make transactions in USD with Cuba.

*Furthermore, as it is not allowed to make payments in US dollars to thirds abroad ,it is necessary to refund with other currencies ,having the consequent loses derived from the exchange rates.

*On this stage, the negative impact by concept of prohibition to use the USD reaches 85 139 436 dollars and the increase of the cost of the country financing risk quantifies in 47 290 204 dollars.

*Between April 2018 and March 2019 the bank system had negative effects caused by 140 foreign banks. In this period 12 more foreign bank institutions denied services to Cuba referring the USA blockade against the island.

Bibliography: Informe de Cuba sobre la Resolución 73/8 de la Asamblea General de las Naciones Unidas «Necesidad de poner fin al bloqueo económico, comercial y financiero impuesto por los Estados Unidos de América contra Cuba».

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