I’m not sure how I’ve never talked about the double currency here in Cuba. I think it goes to show how accustomed I’ve become to the absolutely strange system of having two different national currencies here in Cuba.
In Cuba, there is the Convertible Peso (CUC) that is the only currency that can be exchanged with foreign currency, and Peso Cubano (CUP, or more commonly Moneda Nacional, “national currency”) that has historically been the sole Cuban currency before the 90’s. Originally, like every other currency, there was no need for double currency in Cuba, and the Peso Cubano was the Cuban currency just like the U.S. dollar is the currency of the United States. However, after the fall of the Soviet Bloc in 1989-91, Cuba experienced a severe economic crisis during the 90’s, known as the Periodo Especial (Special Period). In order to try and alleviate the problems and invite tourism as a source of revenue, the Cuban government then decided that U.S. dollars would be an acceptable form of payment in the country.
This practice continued until the 2000’s, where this introduction of the dollar together with other economic reforms put the Cuban economy back on its feet. However, with the start of the Bush administration, relations between Cuba and the United States deteriorated rapidly, to the point that the U.S. Interests Section Building (a level lower of diplomacy than an embassy) in Havana installed an electronic billboard and started to show subversive anti-Cuban government messages. This propaganda and its disrespect towards the Cuban state infuriated Fidel Castro, and diplomatic relations crumbled to the level that the Cuban regime decided to expel the U.S. dollar from its economy. However, as the country had already been using the dollar for years, the Cuban government decided to create a new currency, the CUC, in order to dampen the effect of the disappearance of the dollar from the economy. The government took in the dollar for the CUC one for one, replacing the use of the dollar with the CUC.
The CUC was supposed to be a temporary measure to alleviate the effect of removing the U.S. dollar would have on the Cuban economy, but removing the CUC has proved difficult and still Cuba continues with its rare system of having two national currencies. Nowadays, the CUC trades with the U.S. dollar at about 1 CUC for 1.03 dollars, and at a nationally fixed rate of 1 CUC for 24 CUP. The fact that there are two currencies makes life difficult because whenever I need CUP, I need to first exchange U.S. dollars to CUC, then separately exchange CUC to CUP. Since there are no credit cards in Cuba and everything is in cash, sometimes I will need CUC, sometimes I will need CUP, and so exchanging money is a frequent necessity and a hassle that takes hours at times.
The worse part is that Cubans will generally not identify if their prices are in CUC or CUP. At first, this is a source of massive confusion: does the $3 price for the a hamburger mean $3 CUC (~$3 USD) or $3 CUP (~$0.125 USD)? (In this particular case, it turned out to be $3 CUP). Eventually with time and common sense I started to figure out what the prices are without having to ask if the prices are in CUC or CUP, but I still get tripped out sometimes when I can’t figure out if a $1 yogurt would be a small 4-cent small thing of yogurt or a $1 imported and packaged container of yogurt.
The double currency also has macroeconomic ramifications that trouble the Cuban national bank. The Cuban national bank has to print all of the following: 20 cents of a CUP coin (~0.8 USD cents), 1 CUP coin, 1 CUP bill, 3 CUP coin, 3 CUP bill, 5 CUP bill, 10 CUP bill, 20 CUP bill, 50 CUP(~2 USD) bill, 100 CUP bill, 200 CUP bill, 500 CUP bill, 1000 CUP (~41 USD) bill, 5 cent of a CUC coin (~5 cent USD), 10 cent CUC coin, 25 cent CUC coin, 50 cent CUC coin, 1 CUC coin, 1 CUC bill, 3 CUC bill, 5 CUC bill, 10 CUC bill, 20 CUC bill, 50 CUC bill, and finally the 100 CUC bill. So that’s 25 different bills and coins that have to be distributed. Naturally, this makes keeping track of the flow of money much more difficult, and trying to control of inflation and deflation a tough challenge. The fact that the government artificially sets the exchange rate between CUC and the CUP at 24:1 has also caused an unsustainable overvaluation of CUC, which could spell trouble for future Cuban trade.
The double currency also gives rise to social divisions. Tourists will mostly use CUC as their currency because it is much easier to acquire; you only have to exchange it from the foreign currency, and many hotels will have an exchange bureau inside them (that does not serve CUC-CUP exchanges). On the other hand, the quotidian life of normal Cubans run on CUP, because their salaries are normally payed in CUP, and because if they were to use CUC they would receive an unwieldy salary of 1 CUC per day. This means that the businesses that cater to tourists will have access to CUC, while many other Cubans will not. This creates a natural divide between the people who benefit from tourism and who do not, dependent on who can use CUC and who don’t have access to it.
The Cuban government has been trying to eliminate the CUC, but it has not been easy. Unfortunately, the more time goes on, the CUC will solidify more of a role in the Cuban economy, and it will become increasingly difficult to remove. Even though I’ve gotten used to it, the double currency still has adverse effects to Cuban socioeconomics and I hope that the government can remove it sometime soon.
notclaremont 