Cuba’s national bank announced on June 11 that it would temporarily put a halt to deposits in US dollars, blaming US sanctions that restrict its ability to use the dollar abroad.
According to a statement from the Central Bank of Cuba:
[…] it is increasingly difficult for Cuba to find international banking or financial institutions willing to receive, convert, process or process cash in US currency as a result of the extraterritorial effects of the blockade, and of the additional measures adopted by the United States in the last four years, which, to this day, remain in full force.
The bank said the move would not affect transfers of US dollars from abroad, the value of savings held in US dollars, or cash withdrawals (if funds are available at a given branch).
It tweeted that the suspension of deposits in US dollars will take effect from June 21:
US Dollars Won’t be Accepted as Payment
While Cubans are not restricted from holding them, US dollars won’t be accepted as payment in the country while the measures are in place. Foreign tourists travelling to the the Caribbean island nation have been warned to bring another currency or use international cards.
According to Cuba’s central bank the duration of the block on US dollar deposits depends on the lifting of US sanctions.
A Long History of Sanctions and Love-Hate for the US Dollar
The US’ embargo against communist Cuba began in 1958 – it is the most enduring trade embargo in modern history, with a range of economic sanctions imposed over the years. For one, the Cuban peso cannot be used for international trade.
Given this long-standing economic divide, use of US currency in Cuba has had a chequered past. Possessing dollars was once banned in the country and for many years Cuba imposed a 10% tax on greenbacks.
In 2020 it lifted that tax and introduced dollar-only stores, where US currency can be used to buy higher-quality goods to boost Cuba’s economy in response to falling revenues caused by a decline in tourism during the pandemic.
There is some speculation the central bank’s move to stop accepting deposits in dollars is an attempt to influence the black market price of the dollar.
Could Cryptocurrency Be Key to Cuba’s Future?
Some members of the crypto community think Cuba should go the same route as El Salvador, which recently adopted Bitcoin as legal tender.
One Redditor asked, “Will they take crypto now?”, and another joked: “I can’t wait to get my Coinbase debit card and go to Cuba to spend it all!”
Another more serious take from Reddit cryptocurrency thread: “I don’t think this will reduce demand for US dollars by locals. If anything, it will skyrocket the informal exchange rate with less dollars entering the country but [the] same – or more – amount of people demanding this scarce resource.”