Cuba unveils plan for cryptocurrency as fiat falters

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Cuba has confirmed it is considering plans that could introduce a national cryptocurrency, in a bid to revive the country’s flagging economy, AAP-SBS reported.

The Communist government in Cuba floated the idea on state-owned TV, as a means of easing market reforms designed to improve the fortunes of as much as a quarter of Cuba’s population.

@AlejandroGilF en @mesaredondacuba: #Cuba 🇨🇺 estudia la implementación de una criptomoneda #CubaAvanza @liubamoreno @AlinaSnchez @RadioRelojCuba @radionline @oneliocc @ibs24 @chamberohoy @Guajiritasoy @joaquinsglez @ernestom91 @JoelSuarezPelle @CarlosO28859673 @MEP_CUBA pic.twitter.com/vHoM3IOaxp

— Ramon R 🇨🇺 (@cyber_reloj) July 2, 2019

Some analysts have likened the move to the strategy used by fellow communist state and Cuban ally, Venezuela, which introduced its own cryptocurrency in early 2018.

Known as the ‘Petro’, the cryptocurrency is backed by national oil reserves, and was designed specifically to evade U.S. economic sanctions on the international stage. While there are no suggestions that Cuba intends to follow suit in launching its own cryptocurrency, the plans nevertheless represent the latest move from a sanctions-hit state to turn to cryptocurrency for the answers.

Similar to Venezuela, Cuba has felt the impact of U.S.-led international sanctions, resulting in ongoing financial and political turmoil in the country.

As a result of Venezuela’s problems, Cuba is also suffering from a shortage in aid formerly sent by the Venezuelan government, in a double hammer blow to the country’s fragile economy.

Announcing the plans on TV, President Miguel Diaz-Canel said the proposals were aimed at boosting national productivity, while increasing demand in the hope of stimulating growth in the economy.

As part of the cryptocurrency measures, the government is looking to increase the amount paid to employees in public administration sectors, with some expected to receive as much as double their average monthly salary.

While it remains unclear how the government intends to finance this spending splurge, analysts have cast doubt on the cryptocurrency solution as being an effective way to resolve the problem.

After the launch of the petro, Venezuela appealed to the Organization of the Petroleum Exporting Countries (OPEC) in a bid to get more countries using petro for purchasing Venezuelan oil. However, the proposals were rebuffed, with the petro itself added to the list of U.S. sanctioned assets shortly thereafter.

The appeal for Cuba, in its current desperate economic state, is obvious. Whether the plan is likely to succeed where others, like Venezuela, have failed is an altogether different matter.