Cuba’s top economic official says the government will eliminate a currency pegged to the US dollar, in a move to end its dual-currency system and address problems of economic inequality.
Vice-President Marino Murillo told parliament on Friday that the convertible peso, known as the CUC and pegged to the dollar, would eventually be phased out and unified with the so-called ordinary peso.
“People who have the convertible Cuban peso, whether in the banks or kept at home, will not lose any financial capacity when the dual monetary system is eliminated,” Murillo said, promising that savings in the convertible pesos would retain their value until the change took place.
The official did not say, however, when the change would go into effect.
The announcement comes after the government of President Raul Castro said in October that it would merge the two currencies in order to prevent shocks in the economy like extremes in inflation.
In 1994, Cuba established the dual monetary system following the fall of the Soviet Union, which financially supported Cuba for decades.
The system was designed to keep international trade under government control, while sheltering the domestic economy from market influences.
Critics say the system has created special privileges for some Cubans – particularly those in the tourism sector – while discounting the needs of others.
Tourists use the convertible peso roughly equal to a US dollar, while most Cubans are paid in ordinary pesos worth about four cents.
This is while economists say the role of the US dollar as a reserve currency is coming to an end, with many countries avoiding the dollar to settle trade imbalances.
In early 2013, then Iran Minister of Economic Affairs and Finance Shamseddin Hosseini said the government planned to phase out the dollar in its future international transactions.
Brazil and Argentina signed an accord in 2008 to do away with the US dollar in their bilateral trade.
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