High-Denomination Coins: A Band-Aid for Cuba's Cash Crisis?

In a recent proposal featured in Cuba's state media, the ongoing cash shortage suffocating many of the island's banking operations could potentially be alleviated by introducing high-denomination coins. An opinion piece in Victoria, a newspaper from the Isle of Youth, even floats the idea of minting coins valued at 10,000 pesos or more. These coins would occupy less space, have greater durability than paper bills, and be more challenging to counterfeit.

However, this "likely solution" to the "enervating current situation" of cash scarcity in Cuban banks, as the publication acknowledges, overlooks the underlying issues: a collapsed financial system plagued by distrust and lack of liquidity. The article cites Venezuela, where coins ranging from 50 to 1,000 bolivars are in circulation, to justify the introduction of more bimetallic coins in Cuba.

There are already two domestic precedents: a five convertible peso (CUC) coin—now of only numismatic value—featuring Ernesto Che Guevara's image, minted in 1999, and another depicting Antonio Maceo, issued in 2016.

The Practicality and Pitfalls of Coin Circulation

The argument for this proposal leans on practicality: coins are more durable, don't wear out like paper money, and are less expensive over time. Additionally, it's suggested that people who hoard cash at home—due to fear or distrust—might be more willing to exchange it if the physical volume of cash were smaller, i.e., if there were high-denomination coins.

The commentary insists, "Am I suggesting legitimizing those who evade taxes and hinder monetary flow, worsening the economic stagnation? Never. I aim to improve conditions for the vast majority, the ordinary Cuban... so that until the real solution arrives, there will be more cash available in banks, in paper currency that ATMs can dispense."

Nevertheless, the real causes of the cash shortage go unmentioned: rampant inflation, the collapse of the Cuban peso, widespread distrust in the banking system, and the systematic emptying of ATMs, many of which are broken. There's no mention of the lack of productive backing, the rampant process of dollarization, or the multiple obstacles to accessing one's own money.

Underlying Economic Realities Ignored

This potential alternative overlooks the deeper issue, focusing instead on a superficial fix. More metal in circulation doesn't equate to increased purchasing power or real liquidity for the average Cuban. What's needed isn't a change in the form of money but an attack on the root causes of the cash shortage. And that, for now, is not something that can be minted.

The failed "economic and monetary restructuring" initiated by the government in 2021 delivered a fatal blow to the national currency, skyrocketing its value in the informal market due to the unavailability of dollars in exchange houses (CADECAS) and triggering unprecedented inflation.

The uncontrolled inflation has made essential goods more expensive while wages remain stagnant, eroding the purchasing power of Cubans, who are worn down by long lines, power outages, hunger, and despair.

Struggling with Inflation and Cash Scarcity

According to official data published in October 2024, 39% of retirees in Cuba receive the minimum pension of 1,528 CUP per month, which doesn't even cover a basic diet. A kilogram of powdered milk can cost up to 1,800 CUP, and a liter of oil up to 1,400 CUP.

Economist Pavel Vidal from Colombia's Javeriana University notes that the Cuban crisis has spurred the informal economy, especially the informal currency market, "which heavily relies on cash; thus, you have a government issuing a lot of money without the capacity, without the dollars, to print pesos."

Vidal points a finger at the government for not printing higher-denomination bills, with the largest denomination being 1,000 pesos, which in the informal market exchange rate is equivalent to just three dollars.

Meanwhile, the government's push for digital payments to reduce cash usage faces technical, economic, and cultural hurdles in practice. Broken ATMs, long queues, and limited cash availability have been the reality for months for those attempting to withdraw salaries and pensions across Cuba. Additionally, businesses cite connection issues, non-functional QR codes, unjustified surcharges, or simply refuse to accept electronic payments, which are part of everyday challenges.

The Struggle for Digital Transactions

President Miguel Díaz-Canel has blamed the private sector for the lack of cash in the country's ATMs since the start of bank digitization efforts. However, for some self-employed workers, digital payments are seen as a hindrance: slow, unreliable, and bothersome for customers. This technological distrust adds to the fact that many economic actors, both state and private, cannot access their money swiftly, leading them to prefer cash and operate outside fiscal control, a situation for which the government and its banking system are directly responsible.

Other structural factors also hinder the success of bank digitization: there are areas without coverage where digital platforms cannot be used, making cash payments the only real option.