Quantcast

Cuba to eliminate currency pegged to dollar

Published December 21, 2013 4:52 pm

This is an archived article that was published on sltrib.com in 2013, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Havana • Cuba will eliminate a currency pegged to the dollar as part of a move to end its unique double-currency system, which had become a symbol of economic inequality to many islanders, Cuba's top economic official said Friday.

Tourists currently use a convertible peso roughly equal to a U.S. dollar while most Cubans are paid in ordinary pesos worth about four cents. Many goods are easier to find in government stores that exclusively accept convertible pesos, a mechanism designed to keep the flow of the special currency under government control.

The dual system has created special privileges for Cubans who work in tourism, and resentment among those who don't.

The government of President Raul Castro pledged in October to gradually unify the two currencies in order to prevent shocks like spikes in inflation. Many Cuban economists said the process would take years.

On Friday, Vice President Marino Murillo told parliament that the peso pegged to the dollar, known as the CUC, would eventually disappear, the first time the government has explicitly said that. He promised that savings in the convertible pesos would retain their value until the change took place.

"People who have the convertible Cuban peso (CUC), whether in the banks or kept at home, will not lose any financial capacity when the dual monetary system is eliminated," said Murillo.

He did not say when the change would go into effect.

The double monetary system was established in 1994 amid an economic crisis sparked by the fall of the Soviet Union, which heavily subsidized Cuba for decades.

It was designed to allow Cuba to receive hard currency needed for international trade from the outside world while insulating the rest of the communist economy from market influences.

In October, the official newspaper Granma said that the government's first step would be to allow several businesses that currently accept only convertible pesos, or CUCs, to do business in ordinary Cuban pesos, or CUPs.

The official exchange rate will remain in effect, Granma said, meaning the goods themselves will remain out of reach for Cubans without access to the foreigner exchange-driven economy, which includes millions of dollars a year in remittances from relatives in the United States and other countries.