Cuban Banks Have No Money Due to the Country's Economic Crisis

Cuban banks have no money due to the country's economic crisis. The economic crisis has led to a severe shortage of cash in the banks.

The Cuban government has been struggling to import goods and services due to the US embargo and low oil prices. This has resulted in a significant decrease in the country's foreign exchange earnings.

As a result, the Cuban banks are unable to access foreign currency to import essential goods. The banks are also unable to provide loans to businesses and individuals due to the lack of liquidity.

The economic crisis has been ongoing for several years, with the country's GDP declining by 3.5% in 2016.

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Long lines have been forming outside banks and ATMs in Havana and other areas in recent days as Cubans seek more cash for everyday transactions.

The cash shortage is related to Cuba's economic crisis, one of the worst in decades.

The main reasons for the shortage are the country's growing fiscal deficit, a lack of banknotes worth more than 1,000 Cuban pesos, stubbornly high inflation, and cash not being returned to banks.

Most cash is held by entrepreneurs and owners of small and medium-sized enterprises who are reluctant to return money to the banks.

Cuban economist Omar Everleny Perez said that in 2018, 50 percent of cash in circulation was in the hands of the Cuban population and the other half in banks, but in 2022, 70 percent of cash was in the wallets of individuals.

Cubans are struggling with a complicated monetary system with several currencies in circulation, as well as stubbornly high inflation, meaning more and more physical bills are needed to buy products.

Inflation on the island was 77 percent in 2021, dropping to 31 percent in 2023, but for average Cubans, these official figures do not reflect reality.

Official figures do not reflect the reality of market inflation, which reaches up to three digits on the informal market.

Cuban state workers earn an average monthly salary of between 5,000 and 7,000 Cuban pesos, or between $14 and $20 in the informal market.

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The crisis in Cuban banks is a complex issue with multiple causes. One major factor is the country's economic isolation, which has led to a severe shortage of foreign currency.

This has resulted in a significant trade deficit, with Cuba importing more goods than it exports. In 2020, the trade deficit reached $2.5 billion, exacerbating the country's economic struggles.

The lack of foreign currency has made it difficult for Cuban banks to access the international financial system, limiting their ability to secure loans and investments.

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Cuba's banks were unable to pay CD's because the country's currency, the Cuban peso, was inconvertible to US dollars, making it difficult for banks to meet their foreign debt obligations.

The Cuban government had taken over many private businesses, including banks, in 1968, which led to a lack of private sector involvement in the economy.

This resulted in a shortage of hard currency, making it hard for banks to pay off their debts.

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The Cuban government's decision to impose a moratorium on foreign debt payments in 1993 further exacerbated the problem.

The country's economy was heavily reliant on sugar exports, which were severely impacted by the collapse of the Soviet Union in 1991.

Banks were unable to pay CD's because they didn't have the necessary foreign currency to meet their obligations.

Cubans are struggling with a complicated monetary system that includes several currencies in circulation.

The country's inflation rate was a staggering 77 percent in 2021, and although it dropped to 31 percent in 2023, the reality is much harsher on the informal market, where inflation reaches up to three digits.

The average Cuban state worker earns between 5,000 and 7,000 Cuban pesos per month, which is equivalent to $14 to $20 in the informal market.

Most cash is held by individuals, not by banks, with 70 percent of cash in circulation being in the hands of the Cuban population in 2022.

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The main reasons for the cash shortage are the country's growing fiscal deficit, a lack of banknotes worth more than 1,000 Cuban pesos, stubbornly high inflation, and cash not being returned to banks.

Cuban economist Omar Everleny Perez points out that most cash is held by entrepreneurs and small business owners who are reluctant to return money to the banks.