The Central Bank of Cuba published an explainer addressing public concerns that the recent introduction of high-denomination Cuban peso banknotes (CUP 2,000 and CUP 5,000) could fuel inflation. It argues that expanding the denomination structure is designed to facilitate payments in an economy already experiencing higher prices and does not, on its own, increase the overall money supply. The note distinguishes between physical cash and bank account balances, and describes money creation primarily occurring through bank credit and through the Ministry of Finance and Prices selling sovereign debt to the central bank, while cash withdrawals only convert existing deposit money into banknotes. It links cash shortages and queues at ATMs and branches to a mismatch between deposit balances and the availability of physical cash, driven by inflation increasing the need for larger denominations, the role of the informal economy in cash-based transactions, and uneven access to electronic payment infrastructure. The explainer also challenges the view that private actors arbitrarily “hoard” cash, arguing that cash holdings largely reflect income generation or access to credit, even if some agents retain cash due to distrust in banks, informal activity, or as a hedge against inflation.
Central Bank of Cuba 2026-04-10
Central Bank of Cuba explains new CUP 2,000 and CUP 5,000 banknotes are a cash-management measure not new money creation
The Central Bank of Cuba published an explainer stating that introducing CUP 2,000 and CUP 5,000 banknotes is intended to ease payments in a high-inflation environment and does not itself expand the money supply. It clarifies that money creation occurs mainly via bank credit and sovereign debt sales to the central bank, and attributes cash shortages and ATM queues to a mismatch between deposit balances and available banknotes, the cash-intensive informal economy, and uneven access to electronic payments rather than arbitrary hoarding.