Details of currency unification to be announced later this year

President Díaz-Canel, has said that the issue of unifying Cuba’s unique dual currency system cannot be delayed, and that work is advanced on the legislation that would lead to it being placed before the National Assembly in 2020.

Speaking to members of the Cuban National Assembly on 21 December, he told delegates “this issue has taken us too long and its solution cannot be further delayed”.

Granma reported that, to applause, Cuba’s President told legislators that the necessary regulations were “in an advanced phase of study and approval” and the government had a duty to meet the deadlines established for the necessary reforms.

Noting that the it was the most pressing domestic issue facing Cuba in 2020, Díaz-Canel said that the decision and its complexity will have an impact on the whole of Cuban society but will be applied sequentially “minimising the effects on the population”.

“This process is not an exchange of currencies, so I affirm that what was expressed on previous occasions in that bank deposits in foreign currencies, convertible pesos, Cuban pesos, as well as cash in the hands of the population will be guaranteed”, Granma quoted the President as saying.

Speaking about the process presently underway, Díaz-Canel said “Currently, efforts are focused on the integral validation of the results of each aspect; the elaboration of legal norms; the organisation and execution of training; political assurance and social communication processes”.

Monetary duality was agreed following the collapse of the Soviet Union Cuba’s benefactor in the 1990s, and the consequent introduction of the ‘special period in peacetime’. While the measure had short term benefits, over time, the Cuban government says, it has had negative economic and social costs, making national economic performance hard to manage and assess. Cubans are mainly paid in CUP despite many non-essential goods only being available in retail outlets in CUC. The CUC is presently valued at 1CUC to 24CUP.

In his remarks Díaz-Canel, quoted a statement on the subject made in 2017 by the then President Raúl Castro, now First Secretary of the Communist Party, in which he referred to the high cost of monetary and exchange rate duality. Castro had said that the measure had failed to reward or had demotivated many in senior  positions whose only income was in Domestic Pesos (CUP), causing some of the best and most skilled to migrate to the non-state sector.

In recent moves linked to currency unification, a larger peso note has begun circulating, convertible currencies have been deemed no longer legal tender for purchases, retail stores have begun to sell non-essential and ‘luxury’ items such as appliances for dollars though electronic bank cards linked to convertible currency bank accounts, the import and export of CUC has been banned, stores have opened giving change in CUC, and stress has been laid on ordinary Cubans saving more.

The decision to undertake currency unification suggests that increased US economic pressure is forcing the government to have to introduce reforms it has long contemplated, but which have previously been the subject of high-level political disagreements as to their possible impact on Cuban society. Many Cubans remain wary of the process fearing it will see price inflation and the devaluation of any savings they might have. The Cuban government, however, hopes that through careful management convergence will eventually benefit the Cuban economy and all Cubans, and no one will be disadvantaged.

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