By the Cuba Journal Staff.
Image by: Migdiachinea
The Cuban government announced in 2013 plans to end the country’s dual-currency system. Normalization of relations with the United States will likely allow a new currency plan to succeed this year.
Today, most Cubans are paid in the Cuban peso, or CUP, while the majority of the most important and desireable goods are available only with the convertible peso, or CUC, that is pegged to the US dollar (CUC$1:US$1). In contrast, Cuban pesos are worth a few pennies. Most Cubans make the equivalent of about $50 a month from their official CUP salaries.
Neither peso is accepted as currency outside of Cuba. Because Cuba is not a member of the International Monetary Fund (IMF), it is unlikely any of Cuba’s currency will be convertible outside Cuba in the near future.
The dual system came into being after the collapse of the Soviet Union when Cuba introduced the U.S. dollar as the country’s second currency. In 2004, the government replaced the dollar with the convertible peso.
The move would continue President Raúl Castro’s efforts to introduce market elements and phase out price distortions.