independent

Thursday 17 April 2014

Cuba to scrap foreigners' currency

Two soon to be scrapped convertible pesos, right, alongside regular Cuban pesos at a food stall in Havana. (AP)

Cuba is to scrap a currency pegged to the dollar in a move to end the island's double-money system which had become a symbol of economic inequality.

Tourists currently use a convertible peso equal to a US 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 and the dual system creates privileges for those who work in tourism.

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

Vice President Marino Murillo told parliament the special peso, known as the CUC, would eventually disappear - the first time the government has explicitly said that. He promised 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 Mr 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 subsidised 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 foreign exchange-driven economy, which includes millions of dollars a year in remittances from relatives in the United States and other countries.

AP

Press Association

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