Several days have passed since the new changes to the exchange market were announced, and the island's vox populi is filled with diverse opinions and legitimate questions that, in certain cases, generate some doubts. This is logical given the complexity and challenge of a process that, as has been reported, is expected to be gradual and progressive over time.
The beginning of its implementation has been only the starting point of a larger goal that seeks, at the most important threshold, to move toward the unification of official exchange rates in the future.
It was never said that the path would be easy or that, overnight, all outstanding issues would be resolved to eradicate, for example, the illegal currency market. On the contrary, the new measures have been introduced to gradually organize the country's currency flows and to expedite an official, transparent, and legal market that allows for foreign exchange transactions.
Even so, this step has generated differing opinions on social media and in public spaces, in addition to some issues regarding its implementation being misrepresented. Seeking answers to these frequent concerns from the population about the foreign exchange market, we once again turned to Ian Pedro Carbonell Karel, Director of Macroeconomic Policy at the Central Bank of Cuba, for his opinion.
The deputy to the National Assembly of People's Power agreed to answer many of the questions that are on everyone's minds these days, in order to dispel doubts about the most frequently discussed issues.
— Why are three exchange rates necessary in the country today?
— They are necessary because the exchange rate policy is based precisely on gradualism. The temporary coexistence of three exchange rates responds to the need to protect essential goods and services, while stimulating the generation of foreign currency and regulating exchange flows.
In addition, the exchange rate mechanism implemented is in line with the ultimate objective of exchange rate policy, which is the unification of exchange rates.
–Why use the concept of a floating rate for segment III?
–We use it because the exchange rate moves according to market conditions and the economic environment, and does not remain fixed. Unlike the exchange rate regime we had until recently, in this case there is no fixed exchange rate level.
"The latter is adjusted according to the availability of foreign currency, real demand, and other economic factors, which allows it to more closely reflect the reality of the economy."
"The mechanism allows the rate to adjust flexibly to changes in the macroeconomic environment, reducing distortions and moving the formation of the exchange rate away from informal and speculative spaces."
–Where does the benefit of the new rate lie for the population, and why is its amount being questioned?
–The main benefit of the new rate is that, as explained, it is based on actual transactions involving the purchase and sale of foreign currency for national currency, rather than on intentions or informal references.
"Unlike the informal alternative, this rate has a real economic basis, which reduces speculation."
"As a result, the rate is less volatile, which benefits both non-state forms of management and consumers by allowing for more stable price formation and more rational consumption decisions."
"Furthermore, as the market consolidates, individuals and non-state forms of management will be able to channel all their foreign currency and domestic currency needs through the financial system, providing greater security, reducing the risk of fraud, and better protecting consumers."
–How is the exchange rate for segment iii currently determined?
–It is formed on the basis of actual currency purchase and sale transactions carried out on the official market, taking into account currency availability, effective demand, and other relevant macroeconomic indicators.
"This process is supported by specialized technical analysis and is adjusted periodically."
–How do these changes influence inflation mitigation?
–Exchange rate changes help create favorable conditions, but sustained inflation reduction depends on a broader set of macroeconomic factors.
"Among the most important are the containment of monetary issuance, the increase in the supply of goods and services in national currency, and the gradual reduction of internal dollarization, which currently puts additional pressure on prices."
"As the official exchange market consolidates, expectations are corrected, and distortions are reduced, the effectiveness of these policies is also facilitated. However, inflation can only be reduced in a lasting way when all these actions are taken in a coherent and simultaneous manner."
–In relation to remittances, what are the incentives for those who receive them?
–The main incentive is that channeling remittances through the financial system is cheaper, safer, and more transparent than using informal mechanisms.
"Official channels reduce costs associated with unregulated intermediaries, eliminate unnecessary risks, and ensure that funds reach their beneficiaries in full."
"Likewise, the use of the financial system strengthens consumer protection, expands the possibilities for using these funds within the country, and contributes to the consolidation of the foreign exchange market."
–In the case of international collaborators and aid workers, what rate is applied to the exchange of their income?
–The income of international collaborators and aid workers is exchanged at the official rate of segment iii in effect on the day.
–Can balances in MLC accounts be exchanged on the market? What rate applies?
–The balances of these accounts can be exchanged for Cuban pesos, including using the Transfermóvil or EnZona payment gateways. This operation has no commercial margin, so the rate applied is the same as that published by the Central Bank of Cuba.
–How should the gradual nature of this process be interpreted for the future?
–It implies that exchange rate changes will be implemented in a progressive and orderly manner, with the aim of limiting inflationary impacts and avoiding sudden adjustments that affect the population.
"At the same time, it allows the various economic agents the time they need to adapt to the new circumstances and adjust their costs, prices, and investment decisions."
"This gradual approach is also linked to the gradual creation of incentives and mechanisms that contribute to reactivating the economy in a sustainable manner that is compatible with the country's actual conditions."
