Cuba’s economic future may depend on rebuilding trust

Cuba’s recent move to open parts of its state-controlled economy to private enterprise, foreign investment and private banking has raised a critical question: Can the island build the legal and financial systems needed to support real economic growth?

For Marcos Kerbel, an FIU Business faculty member and longtime international banking executive, the answer depends on whether Cuba can establish something investors, entrepreneurs and ordinary citizens all need: trust.

“The legal system has to change, and people have to have assurances that their investments are going to be protected,” Kerbel said.

Cuba is facing one of its most severe economic crises in decades, marked by widespread power outages, fuel shortages, food insecurity, water problems and a collapsing currency. In June, Cuban officials approved a package of market-oriented reforms that would allow private banks to enter the country’s state-dominated financial sector, permit private participation in some state enterprises and expand space for private business.

The measures suggest a significant shift, but Kerbel said opportunity will depend on implementation, rule of law and respect for private enterprise.

Banking, trust and the rule of law

Kerbel brings a personal and professional lens to the issue. Born in Cuba, he left the island as a teenager in 1961 through Operation Pedro Pan as conditions deteriorated after the revolution. He was sent to foster homes in Los Angeles before reuniting with family and later settling in Atlanta, where he earned a bachelor’s degree in accounting and a master’s degree in international business from Georgia State University.

He began his banking career in Miami in 1969 and rose to senior vice president in the international division of Pan American Bank, now part of Bank of America. In 1977, after Florida changed its laws to allow international banks to operate in the state, Kerbel helped open the first international bank licensed in Florida, Israel Discount Bank, where he spent 22 years as senior vice president and manager.

His view of Cuba’s future is clear: Legal protections, banking reform and private enterprise would have to come first.

Kerbel described the current situation in Cuba as “dire,” with many residents struggling to afford food and basic necessities. He pointed to the deterioration of the Cuban peso, which he said has fallen from parity with the U.S. dollar before the revolution to an estimated 600 pesos per dollar in the parallel market, as a sign of the island’s economic decline.

“The situation is intolerable for most of the people in Cuba,” he said.

Before Cuba can become a realistic opportunity for investors, Kerbel said, the government would need to assure them that property would not be confiscated or expropriated without compensation. That concern is rooted in the nationalizations that followed the 1959 revolution.

“You have to have private enterprise,” he said.

Banking reform would be central to any transition, Kerbel said, because banks help drive activity across an economy. Opening and operating a bank requires lawyers, accountants, employees, investors and customers. International customers also generate demand for travel, hotels, transportation, medical services and other industries.

“Banking affects the entire economy of a city or state or country,” Kerbel said.

Kerbel is a member of the Cuban Banking Study Group, which studies Cuba’s banking history and possible financial models for the future. The group supports a banking system that includes Cuban-owned private banks, complimented by government-owned institutions, multinational agencies and foreign banks.

Before 1959, Kerbel said, Cuba had a sophisticated financial sector and strong banking ties to the United States. He noted that the Federal Reserve had two offices connected to Cuba through Boston and Atlanta because of the volume of business between the United States and the island. Had the revolution not occurred, he believes Cuba could have become one of the strongest offshore banking centers in Latin America.

Looking ahead, Kerbel said the Cuban diaspora could play a major role in rebuilding the economy, but only if there is confidence that change would benefit Cuba and its people.

“It’s going to take reassurances and a strong government that really is pro-democratic and pro-private enterprise,” he said.

A healthier Cuban economy, Kerbel said, would include exports, tourism, manufacturing, skilled professionals, private businesses and opportunities for Cubans on the island and abroad to contribute capital, knowledge and expertise.

“Most people are optimistic that change is going to happen,” Kerbel said. “But Cuba has lost its reputation in international financial markets.”

Beyond banking: an export-led recovery

If banking reform would help establish the foundation for economic activity, the next question is what kind of economy Cuba could build.

Jerry Haar, a professor of international business at FIU Business recently argues that a future Cuban recovery would need to be driven by exports.

Haar said that Cuba will need major financial resources to address the needs of its population, but outside aid alone is unlikely to be enough. He noted that while the United States, Canada and the European Union may be willing to contribute to a future recovery, Cuba should not expect the equivalent of a Marshall Plan.

Foreign investment, including investment from the Cuban diaspora, could play an important role. But Haar cautioned that cultural and family ties alone will not be enough to attract capital if investors can find more stable opportunities elsewhere in the region.

“Cuba would need a radically improved investment, tax and regulatory environment to compete for that capital,” said Haar. “Investors would also need confidence in commercial rules, property rights, contract enforcement and the ability to operate without excessive political or bureaucratic interference.”

Haar identified four sectors as among the most promising for an export-led recovery: agriculture and agribusiness, tourism, health technology and pharmaceuticals, and information technology.

“Agriculture and agribusiness could help address both domestic needs and export potential, particularly if Cuba can modernize production, improve supply chains and attract investment in equipment, logistics and processing,” said Haar. “Tourism, long one of the island’s best-known economic assets, could remain a major source of hard currency, though it would require infrastructure, service quality and investment conditions that allow the sector to compete with other Caribbean destinations.”

Health technology and pharmaceuticals present another opportunity. Cuba has long promoted its medical and scientific capacity, but Haar noted that the sector remains constrained by limited capital, imported inputs and access to advanced equipment. With investment, public-private partnerships and better integration into international markets, he said, health technology could become part of a more dynamic Cuban economy.

Information technology also holds potential, particularly given the island’s educated workforce. But that sector would depend heavily on infrastructure, reliable connectivity, regulatory openness and access to global customers.

Together, those sectors point to a broader lesson: Cuba’s recovery cannot rely solely on remittances, tourism or nostalgia from the diaspora. It would need industries capable of producing goods and services for external markets and generating the hard currency needed to stabilize and grow the economy.

For that to happen, financial reform and sector development would have to move together. Banks can provide credit, process transactions, support trade finance and connect entrepreneurs to capital. But exporters also need reliable courts, enforceable contracts, logistics networks, modern infrastructure, transparent regulation and confidence that profits can be reinvested or repatriated.