Cuba’s push for digital banking meets skepticism amid economic challenges

The Central Bank of Cuba has recently announced a shift towards a more digital economy, aiming to decrease the amount of physical cash in circulation.

As per the new regulation, both citizens and businesses will have six months to conduct most of their transactions electronically.

However, many Cubans are wary of this change, concerned about the technological infrastructure of the island.

The prevalent sentiment common among Havana residents: they’d rather have cash in hand.

Common grievances include unreliable ATMs that, even when operational, only allow a withdrawal of about 5,000 pesos (approximately 28 dollars).

Since a monetary reform in 2021, it’s become typical for locals to carry large sums of cash for basic transactions.

Joaquín Alonso, president of the Central Bank, has expressed concern about the significant amount of money outside the banking system, which doesn’t circulate within the formal economy but only between individuals.

The government faces challenges in providing adequate card payment terminals and updating the ATM network. For the state, managing and producing secure cash notes is costly.

Self-employed Cubans find banking inconvenient, especially with withdrawal limits and long lines.

The lack of smartphones, among many, also hinders electronic transfers.

Many think the shift towards digital banking is essential due to high prices and the lack of high-denomination bills.

Meanwhile, inflation rates have been rising.

The announcement of this banking shift has coincided with record-high exchange rates for the dollar and euro, guiding the island’s informal economy.

Newly authorized private small-medium enterprises (SMEs) are also apprehensive, as they must conduct all operations electronically.

This move is challenging for businesses that need dollars for imports, which are difficult to obtain officially.

Recent reports suggest that even basic commodities like food are being imported amidst Cuba’s worst economic crisis in 30 years.

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This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief