Cuba to Eliminate Currency Pegged to Dollar

Saturday, 21 Dec 2013 07:48 AM

 

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HAVANA — Cuba's top economic official said Friday that the country will eliminate a currency pegged to the dollar as part of a move to end the island's double-currency system, which had become a symbol of economic inequality to Cubans.

Currently, tourists use a convertible peso equal to a U.S. dollar while most Cubans are paid in pesos worth about four cents. Many goods are easier to find in government stores that exclusively accept convertible pesos. The dual system creates privileges for those who work in tourism.

The government of President Raul Castro had pledged to unify the two currencies.

Vice President Marino Murillo told parliament on Friday that the special peso, known as the CUC, would eventually disappear, the first time the government has explicitly said that. He promised that savings in 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 CUP.

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.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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