10/31/13 - TIME - Cubans React to End of Cuba's Dual Currency System
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
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
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.
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