Cuba is Looking Into Cryptocurrencies to Avoid US Sanctions

Today’s news report that Cuba is exploring the use of cryptocurrencies in order to avoid sanctions set by the United States. Other countries are expected to follow suit.

Today Cuba’s president Miguel Diaz-Canel went on local television to address the public. He informed that the government is studying the use of cryptocurrencies and the plan would be to raise capital for approximately one-quarter of the country’s population in order to pay for the upcoming reforms.

Currently, Cuba is facing a crisis because of the fast decline in Venezuelan aid, lower rate of export and the ever-long U.S. trade embargo.

Their overall plan is to boost the growth of national production and demand. The U.S. sanctions directly target tourism and foreign investments to Cuba. The country’s government is looking into cryptocurrencies as a way to use it in its international and national commercial transactions:

“We are studying the potential use of cryptocurrency […] in our national and international commercial transactions, and we are working on that together with academics,” said Cuba’s Minster of Economy Gil Fernandez.

The New Plan Anticipates a Raise of Pensions and Wages.

The new package of plans also anticipates the raise of pensions and wages for workers in the public administration, social services, and also the state-run media. The expected raise would be approximately 50%, raising the medium monthly wages from $25 to $44.5.

However, many Cubans say that this measure won’t be enough to breach the gap between salaries and the cost of living. Nevertheless, it will at least boost the purchasing power of citizens. For the average general practitioner, their wages will most presumably go from around $40/month to something like $64/month.

Of course, this is still very low if comparing to the developed country monthly wages, but at least, as a Cuban economist Omar Everleny says, this raise was crucial as the workers were so demotivated and fleeing the country:

“For the first time, (the government) is linking the fact that everything can be achieved if workers are motivated.”

Decentralizing State-Run Company Performance

Gil Fernandez said that the country is also thinking about decentralizing state-run company performance. That way they aim to improve and stimulate local production, the substitution of imports and possibly increasing exports. He said that this way the companies could provide cash more efficiently in a centralized system.

The Cuban government also is planning to expand a system that would allow some companies to keep a percentage of the hard currency they earn in order to reinvest it immediately. That way those companies wouldn’t have to apply for credit.

However, considering all this, it is unclear how exactly Cuba is going to execute this plan. Whether they are planning to create their own state-run currency or use Bitcoin or other already available cryptocurrencies instead. Overall, it looks like Cuba has many advantages for adopting cryptocurrencies and other countries are exploring this idea. Countries such as Iran, which also is facing an ever-long U.S. reception, is also looking into adopting cryptocurrencies in order to avoid the sanctions.