You have to hand it to the Cuban dictatorship. When it comes to “reforms,” they know how to get creative. The latest reform to hit the Cuban people has now turned the island into the world’s largest pawn shop.
Cuba lets borrowers use gems, autos as collateral
HAVANA – Cubans can now use personal property such as jewelry, cars and works of art as collateral for loan applications under the island’s nascent lending system, according to a new law enacted Thursday.
The measure expands Cubans’ ability to apply for credit to build homes, start their own businesses or invest in farming equipment. Previously Cuban banks , all of them run by the state , only accepted liquid collateral such as solvent co-signers, bank deposits and personal income.
Some would-be lendees have complained that they were unable to get credit because they lacked such liquid assets.
Cuba announced its new credit system in late 2011. Most loans have been small so far, and are limited according to the lendee’s ability to repay.
Part of President Raul Castro’s economic reform plan, the rules on collateral are apparently intended to give the expanding entrepreneurial class a leg up. Changes under Castro in recent years have increased the ranks of legal private business operators, independent workers and farmers.
Taking effect Thursday with its publication in the government’s Official Gazette, the law lists items that are acceptable collateral including precious stones, paintings, sculptures, second homes and agricultural goods from livestock to farm equipment.
The goal is to “diversify the ways people can access credit, now with the possibility of offering as collateral other goods that are not the ones traditionally accepted by the bank,” Juana Lilia Delgado, a member of a commission set up to supervise the economic reforms, told Communist Party newspaper Granma.