Cuba has reportedly banned its small businesses from using U.S. bank accounts, just weeks after the Biden administration allowed Cubans to use the banking system.
Havana’s decision comes at a time when the country is having its worst economic crisis since the collapse of the Soviet Union and is dealing with inflation that hit 31% last year, Bloomberg reported Friday (July 26).
Cuba aims to keep dollars within the country, according to the report.
Now, the government says all payments to international suppliers must be made through local banks, Bloomberg reported
This move is part of the Cuban government’s larger crackdown on the private sector, per the report.
Cuba began allowing the establishment of small- to medium-sized businesses (SMBs) in 2021, and more than 11,000 such businesses have been formed since then, according to the report.
Entrepreneurs interviewed by Bloomberg said that many small businesses need offshore accounts because they’re unable to get hard currency in the local market, and that some believe the government wants to drive them out of business.
The Biden administration announced the new regulations allowing entrepreneurs in Cuba to open bank accounts in the United States in May, aiming to support the country’s growing private sector, the New York Times reported at the time.
That marked the first time Cuban entrepreneurs were allowed to open U.S. bank accounts amid the long-standing embargo the U.S. has imposed on the country, according to the report.
When announcing the amended regulations in May, the Treasury Department said in a press release: “These regulatory amendments update and clarify authorizations in support of internet-based services to promote internet freedom in Cuba, support independent Cuban private sector entrepreneurs, and expand access to certain financial services for the Cuban people.”
In an earlier attempt to address effects of Cuba’s economic crisis, the Cuban Central Bank issued regulations in August that put a limit of 5,000 pesos on cash transactions between state and private businesses and banned those organizations from using ATMs.
These measures aimed to encourage the use of an electronic form of payment, targeting runaway inflation and a large off-the-books economy that has developed amid the country’s economic crisis.
