Just weeks after the Biden administration allowed Cuban citizens to use the U.S. banking system, Cuba has reportedly banned its small businesses from using U.S. bank accounts.
Havana’s decision comes at a time when the country is grappling with its worst economic crisis since the collapse of the Soviet Union and inflation that hit 31 percent last year, Bloomberg reported on Friday (July 26).
According to reports, Cuba is aiming to keep the dollars in the country.
Now, the government says all payments to overseas suppliers must be made through local banks, Bloomberg reported.
The move is reportedly part of a larger crackdown by the Cuban government on the private sector.
According to the report, Cuba began allowing the establishment of small and medium-sized businesses (SMBs) in 2021, and since then, more than 11,000 SMBs have been established.
Entrepreneurs interviewed by Bloomberg said many small businesses need offshore accounts because they cannot raise foreign currency in the local market, and some believe the government wants to force them out of business.
The Biden administration announced new regulations in May that would allow Cuban entrepreneurs to open bank accounts in the United States, aiming to support the country’s growing private sector, The New York Times reported at the time.
This is reportedly the first time under the long-standing U.S. embargo against Cuba that a Cuban entrepreneur has been allowed to open a U.S. bank account.
When the Treasury Department announced the revised regulations in May, it said in a press release: “These rule changes update and clarify authorizations to support internet-based services in order to promote internet freedom in Cuba, support independent private Cuban entrepreneurs, and expand access to certain financial services for Cuban citizens.”
In an earlier attempt to address the effects of Cuba’s economic crisis, the Cuban central bank issued regulations in August limiting cash transactions between state and private companies to 5,000 pesos and banning these entities from using ATMs.
The measures were aimed at targeting soaring inflation and a large off-book economy amid the country’s economic crisis, and encouraging greater use of electronic payments.
