Cuban Government exploring the potential of cryptocurrencies amid the crisis

Cuba’s Communist government had recently announced that it was contemplating to utilize the cryptocurrencies, which have been considered as safe heaven especially in time of crisis, to accelerate the country’s economy amid a deepening crisis exacerbated by U.S. sanctions and absence of Venezuela’s aid.

Cryptocurrencies have recently picked up the pace as various leaders across the globe haven’t only promoted them but also starting exercising to make it prevalent. Considering the current global scenarios were U.S.- China trade war, Brexit and global slowdown in various sectors have become the most crucial events which can turn the table for investors and individuals. Many have sighted the cryptocurrencies to be a safe vehicle to park their money especially when the outcomes are uncertain.

Cuba is now also exploring the potential of cryptocurrencies to boost its inefficient state-run economy. Cuba is facing strict, decades-old U.S. Sanctions as president Donald Trump has tightened trade embargo. In addition to that, Cuba’s all-weather ally Venezuela couldn’t make the scenario better as it is also facing greater issues. As a result, Cuba has finally decided to study the potential of cryptocurrencies and how it can help to boost Cuba’s economic growth.

As announced on a roundtable on state-run TV by President Miguel Diaz-Canel and his government, raise in the minimum wage and deepen market reforms will be the primary focus.  The aim is to escape the impact of U.S. sanctions, which has targeted tourism and foreign investment in Cuba and to raise national production and demand in order to boost economic growth.  Diaz-Canel said the government was working on the details of the implementation.

“We are studying the potential use of cryptocurrency … in our national and international commercial transactions, and we are working on that together with academics,” Economy Minister Alejandro Gil Fernandez said.

In the new package that will be introduced by the current government, the income raise will be seen in some pensions and wages for workers in public administration, social services, and state-run media and it could hike to $44.5 from around $25 previously.

According to Cuban economist Omar Everleny, the hike was necessary to encourage the workers and to stop them migrating. “For the first time, (the government) is linking the fact that everything can be achieved if workers are motivated,” he said.

Economy Minister Alejandro Gil Fernandez said that the government is also utilizing the power of decentralization to improve state-run company performance and stimulating local production which in return accelerate the exports. “The government was also studying how to allow the growing number of small private businesses to export through the state-run businesses,” he said.