Cubans React to End of Cuba’s Dual Currency System

Cubans React to End of Cuba's Dual Currency System

The unification of the two currencies is expected to be a gradual

process that could take up to 18 months.

By Francesca Trianni @frantrianniOct. 31, 2013Add a Comment

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Cuba took the first step on Tuesday towards eliminating its two-tier

currency system, in a move that observers see as ending a system that

curbs trade and creates two levels of wage earners. The Communist island

nation has been slowly attempting to come out from the cold of years of

economic isolation.



According to Cuban state media, the government plans to gradually

eliminate the dual monetary system in favor of a single Cuban peso. The

system had been in place for the last two decades, part of reforms aimed

at improving the country's economic performance after the collapse of

the Soviet Union. The reasoning behind the two different currencies was

to protect the country's fragile, Soviet-style economy from the

fluctuations of global markets.



Presently, most Cubans receive their salaries in the Cuban peso, or

CUP, which is used in the local economy. But the vast majority of

imported goods on the island are available only with the hard currency

convertible peso, or CUC, pegged to the U.S. dollar and used in the

tourism industry and for foreign trade. This makes the dual-currency

system unpopular with many Cubans, as they can't purchase with Cuban

pesos sought-after imported goods sold in convertible peso.



According to government statistics, most Cubans earn about $20 a month

from their salaries. Neither peso is accepted as currency outside of Cuba.



Reuters reports that the unification of the two currencies is expected

to be a gradual process that could take up to 18 months.



Source: "Cubans React to End of Cuba's Dual Currency System | TIME.com"

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