Cuban Central Bank to Introduce High-Denomination Banknotes to Alleviate Cash Crisis
The Central Bank of Cuba (BCC) is set to issue high-denomination banknotes by the end of September, according to information obtained by the Cuban Newspaper. The move aims to address the ongoing cash crisis faced by the national economy. Ronald Molina, the commercial manager of Banco Popular de Ahorro, revealed the plans in an interview with the official newspaper Victoria.
The issuance of high-value banknotes is expected to bring much-needed relief to the cash shortage, with ATMs set to operate 24 hours a day once again. However, Molina clarified that the new banknotes would be of the same denomination as the existing ones. He also mentioned that the BCC is implementing additional measures to stabilize the situation without resorting to printing extremely high-denomination bills, such as 5,000 or 10,000 Cuban peso (CUP) notes.
The shortage of cash in ATMs is primarily a result of high inflation caused by flawed monetary policies of the communist government. While acknowledging this, Molina attributed the scarcity of high-denomination banknotes to micro, small, and medium-sized enterprises (MSMEs). He stated that as these new economic actors handle and require large amounts of cash for their businesses, they opt to exchange high-value bills among themselves instead of returning them to the bank.
In response to this issue, the Cuban government has emphasized the importance of bankization as a strategy to address the problem. Economic actors who fail to adapt to the new regulations may face penalties, signaling a shift towards a more bank-centric approach.
The situation is particularly challenging on the Isle of Youth, where there are only six ATMs serving a population of more than 86,000. Molina acknowledged the limited availability of ATMs but believed that the existing machines, along with two from the Banco de Crédito y Comercio, were sufficient. He noted that certain areas, such as the pine trees, were among the least affected by the shortage.
The introduction of high-denomination banknotes coupled with the government’s bankization strategy is expected to ease the cash crisis in Cuba. However, the long-term resolution of the issue will depend on addressing inflation and implementing effective monetary policies.