In a first, Cuba’s private business owners will be able to use US banks, Treasury says

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The embargo imposed on Cuba in the 1960s cut the island off from the U.S. banking system. Currently, Cubans visiting the U.S. can open a bank account here, but they cannot access their money once t…

A woman shop at the private business “Bodegon 21” in Havana, on June 5, 2023. SMEs , approved only in 2021 in Cuba, are flourishing, displacing the sordid state-owned businesses that are becoming emptier by the day. Authorities decided in 2021 to accelerate the economic opening in the midst of the worst economic crisis in three decades, with shortages of food and medicine, derived from the pandemic and the tightening of Washington’s sanctions against the island nation.

A senior administration official said that it was “essential” for the Biden administration to make sure the private sector continues to expand on the island. The Treasury Department will also reverse a Trump-era measure prohibiting U.S. banks from processing transactions involving Cuba and banks in third countries, known in the banking industry as “U-turn transactions.” That will particularly benefit companies like Western Union, which sends remittances in dollars to Cuba.

The Cuban private sector has rapidly expanded since it was first allowed in 2021, and there are now more than 10,000 small and medium enterprises, employing a third of all Cuban workers. Because the government is almost bankrupt amid a severe economic crisis, the private sector has taken roles previously unthinkable in a communist island that once banned all private property.

 

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