The Cuban economy has performed admirably of late, even more so when you consider the 53 year trade embargo imposed by the US. During 2012 we saw the Cuban economy grow by 3.1% and experts believe that growth in 2013 is likely to be near 3.7% or even above. As a consequence, the Cuban government has recently confirmed new lending regulations which were initially mentioned as far back as 2011 but have really only come into their own of late.New lending regulationsDespite the fact that Fidel Castro’s brother has been in charge of Cuba since 2006 and opened up markets more than anybody could ever have predicted, there is still much work to be done. All of the banks in Cuba are state-owned, consumers are at the beck and call of the government and indeed the authorities are by far and away the largest employer in the country. However, after initially opening of the debt markets to consumers after taking control of the country from his brother, Raul Castro has been prompted into further positive action.It is now possible for Cuban consumers and businesses to apply for loans via state banks using collateral such as jewellery, cars, artwork and precious stones to name but a few. Initially after the debt market was revamped the only way you could apply for a loan from a state bank was to put up liquid collateral in the shape of money or some form of guarantee. While some consumers and some businesses were able to take advantage of this change in financial regulations, it still left many with assets they were unable to make best use of.Will this change in financial regulations impact the economy?As the state began to lose momentum in the employment market, job losses began to increase and indeed 1 million former state workers found themselves unemployed. As a consequence the government opened up the previously very strict business arena to individuals and indeed farming cooperatives were also legalised. This change in the business arena, to a lesser extent the introduction of a free-market, has had a material impact upon the lives of many Cubans and the prospects for the Cuban economy.The fact that businesses and individuals will now be able to use their assets to improve their liquidity in the short to medium term, for asset purchases or business ventures, sets a very strong foundation for the future. There are already signs that the consumer market and the business arena are ready to embrace the changes in regulations wholeheartedly which will improve massively the liquidity across the Cuban economy.Will the US reduce trade sanctions?Now that President Obama has secured his second term in office there is speculation that he will look to reduce the US government’s trade embargo on Cuba which has been in place for 53 years. This will allow an influx of overseas investment, overseas trade and basically open up the Cuban market to the world. It may not happen overnight, it may take a number of years to fulfil but there seems to be a willingness on behalf of the Obama regime to at least look at reducing trade sanctions and giving Cuba more air with which to breathe.ConclusionThe signs are that Cuban consumers and Cuban businesses have already embraced the change in financial regulations which allow assets to be used as collateral for state funded loans. This will release enormous amounts of liquidity which can be reinvested into the economy to provide momentum going forward. The icing on the cake would be a reduction in US trade sanctions which has been hinted at on numerous occasions by the Obama regime.We have seen some major changes in the Cuban economy, Cuban political arena and consumer markets over the last decade or so. The Cuba we see today is very different to that of 20 years ago or even 10 years ago and the changes are there for all to see. Will this encourage more expats to move to Cuba?