Cuban bank assets in a foreign bank system drop

 

Miami Herald

Cuban bank assets deposited in foreign financial institutions that belong to an international reporting system showed a stunning plunge of $1.55 billion, or 24 percent, in just the last three months of last year.

“It’s highly unusual for those deposits to drop so much, especially because Cuba had been building up its liquidity until then,” said Luis R. Luis, a former chief economist at the Organization of American States who first reported the fall.

A Bank for International Settlements report dated June 4 showed Cuban bank deposits in the BIS’s 43 member central banks and financial centers nosedived from $5.65 billion at the end of September to $4.1 billion at the end of December.

Luis, on the board of directors of the Association for the Study of the Cuban Economy, said that there are no confirmed reasons but lots of possibilities for both the growth of Cuban assets in BIS institutions until September, and their plunge afterwards.

The increase may have reflected Cuban efforts to grow or streamline its commercial trade with BIS member nations, he noted. A country’s bank deposits abroad usually are used to pay for or guarantee import deals.

With Venezuelan President Hugo Chávez, a generous Havana ally up for reelection and reportedly suffering from cancer, the economist added, Cuban officials also may have been increasing their reserves “to protect themselves against a Venezuelan shock.”

BIS reports showed that Cuban assets deposited in member institutions almost doubled from 2008 to the middle of 2011, to $5.8 billion, and surpassed Cuban debts to BIS members for the first time in about 10 years. The debt remained at about $1.7 billion during the same period. Most BIS members are in western and developed countries.

More puzzling are the reasons for the 24 percent plunge in the last three months of 2011 recorded in the latest figures made public by BIS. Cuba has made no comment on the drop.

“We don’t know exactly why this drop happened, but we can talk about several possibilities for why the money became invisible,” Luis told El Nuevo Herald. “And maybe there’s something else that we don’t know about.”

The government may have shifted the money to financial institutions in countries like China and Venezuela, where the banks are not BIS members, the economist noted, in order to streamline its growing commercial trade with those countries.

Cuban ruler Raúl Castro is now visiting China and Vietnam on one of his rare trips abroad since he succeeded brother Fidel.

Perhaps the island’s government drew down on its foreign deposits to pay for imports of agricultural and other products, Luis added. Cuba has been importing an estimated $1.5 billion a year in agricultural products alone.

Cuba, which had large deposits in Spanish banks, also may have been scared by the euro crisis and moved out a large part of its assets. “But then why not put the money in other BIS banks, like Canadian banks?” Luis said.

Cuban officials also may have spent the assets to settle outstanding debts, Luis added, or turned them into gold in hopes of protecting themselves from global economic swings.

Read more World Wires stories from the Miami Herald

  •  
FILE - In this Tuesday, Aug. 12, 2014 file photo, Thai police display pictures of surrogate babies born to a Japanese man who is at the center of a surrogacy scandal during a press conference at the police headquarters in Chonburi, Thailand. A string of recent scandals has lifted a lid on Thailand's largely unregulated commercial surrogacy industry, which has been around for over a decade.

    News Guide: Thailand's surrogacy scandals and laws

    A string of recent scandals has lifted a lid on Thailand's largely unregulated commercial surrogacy industry, which has been around for over a decade. Here's a look at the controversies, some of the ethical dilemmas they have raised and the Thai military government's new draft law that is expected to outlaw the business of surrogacy.

  • Pakistan: 910 militants killed since June

    Pakistan's military says it has killed 910 suspected militants and lost 82 soldiers in a major offensive launched in June in a restive tribal region near Afghanistan.

  •  
FILE - This image made from video released by Islamic State militants on Aug. 19, 2014 purports to show journalist Steven Sotloff being held by the militant group. On Tuesday, Sept. 2, 2014, an Internet video purports to show the beheading of Sotloff by the Islamic State group.

    Second Syria beheading raises stakes for US

    Islamic State extremists have released a video purportedly showing the beheading of a second American journalist, Steven Sotloff, and warned President Barack Obama that continuing airstrikes against the group in Iraq will be met with the killing of more Western captives.

Miami Herald

Join the
Discussion

The Miami Herald is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere on the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

The Miami Herald uses Facebook's commenting system. You need to log in with a Facebook account in order to comment. If you have questions about commenting with your Facebook account, click here.

Have a news tip? You can send it anonymously. Click here to send us your tip - or - consider joining the Public Insight Network and become a source for The Miami Herald and el Nuevo Herald.

Hide Comments

This affects comments on all stories.

Cancel OK

  • Marketplace

Today's Circulars

  • Quick Job Search

Enter Keyword(s) Enter City Select a State Select a Category