How a Social Bank in Cuba Might Function

The Cuba I wish for (2)

By Repatriado

HAVANA TIMES — The crisis which shook the financial world about a decade ago (the repercussions of which we continue to feel to this very day) have been explained in many different ways. Many of these involve complicated terms such as financial derivatives, subprime lending, deflation or a lack of confidence in investments, but I would rather say that what happened happened because some multimillionaires wanted to make more millions by putting everybody else’s wellbeing on the line.

It doesn’t matter what legal framework you impose on large banks, they will always find a way to go around it, but if large financial institutions were more democratic, this wouldn’t happen. However, that’s not the case. Today, a privileged ruling elite are calling the shots and are comfortable knowing that the worse thing that can happen to them is that they only earn 150 million USD and not 300 million USD… this week.

I want a Social Bank in the Cuba I hope my children live in. Private banks are like any other business: profit oriented. A Social Bank would be oriented towards converting national savings into productive investments by financing businesspeople and companies, as well as managing the resources created by large socialized services companies which I discussed in my previous article. llllllllll

A Social Bank would use the branch offices, which are currently open and running all over the island today, as a base for its operations. My proposal is to transform every commercial bank across the country into one, a National Social Bank, where national reserves and profits of large socialized services companies are deposited, as well as private individual and company deposits.

Every employee and client would be considered a beneficiary owner and as such, they will elect the Governor and Regional Governors of Cuba’s National Bank, while having constant access to the bank’s general accounts and accounts of every branch office, not disclosing clients’ names of course, but names aren’t important when inspecting bank management, numbers are.

By using Information and Communication Technologies (ICT) and having transparent accounting processes which are readily available, fees to finance maintenance costs, credit policies and pay scales which are responsibility-dependent, can be agreed democratically.

The bank’s user/owners will contribute a great deal towards spreading a financial culture which they form a part of, something which is much-needed in order for the Cuban people to make conscious and responsible decisions, a safeguard against demagogy.

This will be the institution which also manages large socialized services companies’ accounts, knowing that a part of their earnings can be put toward productive investments and also divide contributions towards public accounts for research, healthcare or education. Of course, experts employed by the bank will present the different options available to managing the bank’s resources and will argue the pros and cons because the vast majority of us won’t know enough to do this, but we know enough in order to choose one option over another, democratically.

One of the bank’s main objectives will be to invest in loans to entrepreneurs and companies and the Social Bank will be banned from using its capital for real estate, financial or any other kind of speculation. Money should go where it is needed so that the resourceful can find the right springboard they need in order to start up their businesses or, alternatively, the security net they need in order to keep going. The stock markets of today’s world rarely serve this original function.

The bank would also provide services which modern banks normally provide to companies and private individuals, including debit cards. Credit cards will exist with well-defined rules on how to apply for them and use them.

The Social Bank will compete on the financial market with continuing assets from the private bank, the difference here being that their profits won’t become dividends for share-holders or bonuses for managers, but will instead be reinvested in the bank over and over again, making it more competitive when investing and capture savings.

By not converting profits into dividends, user/owners will be motivated to invest the bank’s resources into businesses which create social benefits, not just financial profits. Soft loans or even free credits to cooperatives, projects with great added environmental value or scientific investigations, just to give three examples.

The Social Bank will always respect the principle that a project is feasible when the goods it produces are what the market wants. We are the market, we are the ones who vote every day when we decide to buy something, therefore a company which isn’t profitable, will not be sustained by the bank won’t sustain in the long term, which is what the State does today with its planned economy and distorting consumers’ real needs.

As this is just a proposal, a guide to inspire your own models and your own solutions by criticizing the ones I’ve outlined here. We need to have a responsible mentality as social beings, as individual responsibility is the only guarantee we have to create a democracy which really works. And this is the Cuba I wish for, which might be something along the lines of the Cuba you wish for.

16 thoughts on “How a Social Bank in Cuba Might Function

  • May 13, 2018 at 10:41 pm

    Yes Dani – if the UK Government had applied appropriate regulations and not allowed (for example) the Head of the Royal Bank of Scotland to run riot, the Government (ie: the taxpayer) would not have had to jump in and bail them out. The government had little option as I think you are pointing out.

  • May 13, 2018 at 3:18 pm

    The UK government is slowly selling off its share in the banks. In answer to your second question I think the answer would be both. By buying up shares in the banks they allowed the banks to not collapse and therefore could continue to help business.

  • May 12, 2018 at 1:50 pm

    Dani, do you know if some of this bailed banks returned the public money they received from governments, did they paid interest? Did they used the money to lend it to help business or they just use it to covered holes in their accounts?

    I think both of you are right, for a healthiest economy it is needed well regulated Banks, but it is also personal responsibility to know your limit to get in debt and to think that your own personal economy will be not as good as it is when you get a loan or a mortgage.

    Carlyle I love Spain, I was going to tell you that you are wrong about Spanish people, but you are not, and it is not wrong to admit that some cultural characteristic than sometime made peoples so proud have also a bad side, it is not racist to see that there are difference in cultures and that they deal differently with economy. With this said, I still believe that what happened to Spain and Greece was primary big financials fault, I still believe this people were far more irresponsible than Spanish or Greeks and that this big crisis could be eluded.

  • May 11, 2018 at 11:55 pm

    The cadecas at Cuban airports are there to serve arriving visitors and either restrict access by being within the arrival area, or take the form of serving through a hatch. Can you name a bank or cadeca providing service to Cubans, that does not have ‘security’ ie: a man who controls the door allowing in only so many at a time? Look again at the photograph above! That is typical!
    The cadeca that I use regularly (about once every two weeks) allows two people in at a time as there are two cashiers. My wife’s bank which has usually eight cashiers, provides chairs for ten people in the interior (who are given numbered tickets) and the rest have to wait outside.
    Obviously Dani, in your enthusiasm to blame others (ie: the banks), you excuse the folly of the speculators who borrowed the money. It’s always somebody else’s fault. The Credit Unions to which I referred, fulfill most of your criteria. Few have been able to succeed and many have closed. When you speak of regulations, then you bring in the responsibilities of government. The crash of 2008 had little affect upon Canada’s banks due to sound regulations. I don’t know where you live – could be the UK where there was a long term mess necessitating government (ie: public) investment, but look to your government for sound regulation. May I at this point note that the UK, prior to the Cameron government, had a prolonged period of a Labour one – so why didn’t they regulate properly? Maybe having the former Head of the Bank of Canada as Head of the Bank of England will smarten things up in the UK.

  • May 11, 2018 at 4:11 pm

    I agree that the banks needed to be bailed out otherwise the whole financial system would have collapsed. I was making the point that they can’t be left to purely market forces. That has been proven. They need at least to be properly regulated and in my opinion taken into some kind of democratic/public ownership and control. My other criticism is that the financial crash was used as an excuse to bring in unnecessary austerity which just doesn’t work and goes against all economic logic. As Yanis Varoufakis says in his book it is a form of financial waterboarding where the victim is constantly asphyxiated and then revived before repeating the exercise.

    I honestly haven’t had the experience that Carlyle mentions though I have had to wait quite a bit to get served inside the bank.

  • May 11, 2018 at 4:01 pm

    I’ve honestly never had the experience of queuing up outside and I have been to banks in Santa Clara, Ciego and Moron a few times. These have all had cadecas which may possibly be different to other banks. I don’t recall seeing security on the doors either. There definitely isn’t in the cadeca in the artisan fair on the waterfront nor those in the airports.

    Lehman brothers was an exception. Look at Northern Rock, RBS etc. I laugh at your characterization of the Greeks and Spanish but your comment is way off the mark. These countries were doing fine until the crash and the crash affected all the countries in the Eurozone as well as the UK and the US. Though Greece suffered worse being the weakest link in the chain the crash can’t be blamed on national characteristics – it was too widespread. I don’t care about someone having to sell their 9 porches, but I do care about pension funds and benefits being raided as well as the tax hikes which have put many sectors like the tourist industry out of business. I would highly recommend Adults in the Room by Yanis Varoufakis to get the whole picture of events.

  • May 10, 2018 at 11:47 pm

    When did Cubans start queuing Dani. One of their national characteristics is the system of “ultimo?”

  • May 10, 2018 at 11:44 pm

    Name just one bank and location in Cuba Dani that doesn’t have ‘security’ at it’s door?

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