Havana: Cuba's government, in defiance of a ban enacted in 2021, has approved US dollar deposits into the domestic banking system as the Caribbean island nation struggles with an economic crisis.

In a resolution posted late on Monday in the official gazette, the central bank of Cuba announced that "financial and banking institutions will now accept cash deposits of US dollars into bank accounts."

Given Cuba's current economic situation, which is seeing foreign currency start to trickle in as the tourist industry recovers from the effects of the COVID-19 pandemic, the central bank declared the action to be "advisable."

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Cuban Foreign Minister Bruno Rodriguez stated on Twitter on Tuesday that the move "will benefit the nation's economic activity and the population, despite US measures that hinder the financial flow out of Cuba and prevent US cash deposits abroad."

In June 2021, Cuban authorities halted the import of US dollars, claiming that a US embargo prevented Cuba from sending the money abroad.

After Cuba's revolution in 1959, the US imposed a trade embargo on the island nation with the justification that it wanted to stop money from going to what it perceived as a communist government.

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Cuba has consistently criticised the US embargo, and the UN General Assembly recently overwhelmingly voted to lift it. The US and Israel were the only countries to oppose the non-binding resolution.

The Cuban government's action comes after annual inflation reached 39% in 2022 and shortages of foreign currency, prescription drugs, fuel, and food worsened.

Due to the scarcity of dollars, a de facto black market has developed, with some Cubans trying to accumulate enough money to leave the country.

According to US immigration data, a record 220,000 Cubans were registered at the border between the US and Mexico in fiscal year 2022.

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In order to start cleaning up the Cuban economy, this is a good step, according to economist Omar Everleny. Dollars continue to circulate on the black market but never make it to the Cuban state.