| Saturday, September 5th, 2015

How to send money to Cuba and to transfer money from Cuba

Officially named the Republic of Cuba, this Caribbean country is made up of the main island of Cuba, the separate Isla de la Juventud, and numerous archipelagos. Developed as a Spanish colony after its discovery by Christopher Columbus, Cuba eventually gained independence from Spain in the Spanish-American War, and then established independence from the United States by signing the Treaty of Paris in 1902. In 1959 Fidel Castro gained power and ushered in five decades of authoritarian, communist rule. Today, Fidel Castro’s brother, Raul Castro, governs the country as president.

Cuba’s economy has struggled since the US-led sanctions that were a result of the two countries severing diplomatic ties in January 1961. In 1990, the country’s economy entered into a severe economic downturn when Soviet subsidies worth an estimated annual USD $4-6 billion were halted. In late 2014, President Obama began a series of discussions with Cuba to re-establish diplomatic relations, and in early 2015 it was announced that the US sanctions against Cuba would end and diplomatic ties would once again resume between the countries.

Cuba is actively involved in foreign trade and investment and belongs to a number of international organizations. It is currently a member of the World Trade Organization (WTO), the United Nations (UN), and is in discussions to re-join the Organization of American States (OAS). The Cuban government has started the process of loosening its government-controlled economic system and has begun implementing a series of small economic reforms meant to boost consumer and retail spending. Cuban citizens can now purchase cell phones, new and used cars, electronic appliances, and real estate. The Cuban government is also allowing private citizens to own businesses for the first time since the communist revolution. Today, an estimated 500,000 Cuban individuals own a state-issued private business license.

Cuba’s money transfer regulations

Sending money into or out of Cuba has been limited for decades. The recent re-establishment of diplomatic relations between Cuba and the United States should help to improve both institutional and individual efforts to make money transfers into and out of the country. Even with trading blocked between the two countries and economic sanctions in place, nearly USD $2 billion in remittances was sent to Cubans from the United States in 2013.

Recent easing in restrictions by the US government for allowing remittances and funds transfers into Cuba have contributed to increasing amounts of money coming into the country via international fund transfers. Since 2009 the US government has been slowly increasing the amount of currency it permits to be sent into Cuba from the US, and today anyone in the US can transfer up to USD $8,000 a year, or $2,000 every three months, from a bank or a reputable FX currency broker that has operations in Cuba.

Foreign Investment in Cuba

The Government of Cuba has begun efforts to loosen its control of its mostly state-controlled economy to one that is more open to private sector business ownership and direct foreign investment. While most of the country’s means of production and employment are still owned and managed by the state, today private sector production and employment is accounting for an increasing share of Cuba’s total growth and employment.

Cuba’s monetary and regulatory authority

The Cuban government and the Central Bank of Cuba are responsible for setting the country’s fiscal and economic policies and ensuring adherence to domestic and international financing regulations. The Central Bank of Cuba oversees the country’s banking system and financial institutions, and monitors the operation of all cash and electronic payments into and out of the country.

Currency

Cuba maintains two currencies: the Cuban peso (CUP) and the Cuban convertible peso (CUC), which replaced the use of US dollars in 2004 within the country. Formerly, retail stores and businesses used the Cuban convertible peso or US dollars interchangeably, as did tourists visiting the country, whereas the Cuban peso was used typically used for everyday staples and non-luxury items. But after the Cuban government withdrew US dollars from circulation in 2004, the Cuban convertible peso became the most common currency in use within the country. It is currently pegged to the US dollar and at one time was rated the 10th highest currency in the world, as well as the strongest peso currency in circulation.

The peso is circulated in both coins and bills and is based on the centavo, with 1 peso equal to 100 centavos. Peso coins in circulation today include the 1, 5, 10, 25, and 50 centavo coins, and the 1 peso and 5 peso coins. Banknotes circulating include the 1, 3, 5, 10, 20, 50, and 100 peso banknotes.

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