The Cuban economy is something of a peculiarity due to the fact that there are two currencies in use in one country. With both the Cuban Peso (CUP) and the Convertible Cuban Peso (CUC), things can get confusing for visitors. But why is currency in Cuba so complicated?
For decades, the country worked only in CUP, until it introduced the CUC in 1994 in order to bolster a weak economy. Originally, the new currency was supposed to be used by tourists and to buy luxury goods, but it has since spread to almost every area of the economy.
While the CUC may have allowed Cuba access to foreign currency, it has created serious divisions in society. For example, those who are paid in CUP and don’t have access to CUC are significantly worse off due to the fact that one CUC is worth 25 CUP. Anyone who works for the state, from doctors to police officers, are at a serious disadvantage compared to those who can charge for services in CUC, such as taxi drivers and restaurateurs.
The two-currency system has made a new class of entrepreneurs in Cuba that are far wealthier than state workers. It has created such problems that the government has been talking about unifying the two currencies for years.
Th current president, Raul Castro, promised to work on the issue when he took power in 2008, but so far no progress has been made. There are serious concerns over the effect of unification on inflation, and the Cuban economy remains fragile.
Rumours continue to swirl regarding unification, but those who have savings in CUC are strongly opposed to the idea as it would devalue the convertible peso. The two-currency system may have helped Cuba out in a bind, but it has since started to cause more problems than it’s worth. The problem is that there is no easy way to get out of it.