Early Farewell to the CUC

La Habana/It was barely 10:00 am Wednesday, January 28th, and the currency exchange (CADECA) at Belascoaín had no national currency (CUP)*. One of the tellers explained that he had only several 50 peso bills and that was it until the “cash truck” arrived. Some customers, leaving because they could not transact business, stated that this has become the norm, not only at this currency exchange, but also at the one on Galiano Street, across from the Plaza del Vapor.

These are virtually the only two currency exchanges operating in the municipality of Centro Habana after most of them were converted to ATM’s, so both exchange of hard (i.e. foreign) currency to Cuban convertible currency (CUC) as well as CUC to CUP implies traveling to some CADECA or to Banco Metropolitano, both located at some distance, and the likelihood of having to stand on long lines before being able to complete the desired transaction.

Another difficulty that has become common in both CADECA and ATM locations is the absence of bills in denominations smaller than 100 or 50 CUP, which also distresses the population, especially the elderly, who receive their pensions in debit cards and are often unable to withdraw all of their money, since there are no 5 or 1 peso bills available. In these cases, they need to wait a whole trimester or quarter until enough funds accumulate in their accounts to cover the minimum denominations of 10 or 20 CUP, a ridiculous amount compared to the high price of any market product, but what is significant is that the affected individuals depend almost entirely on this income.

Since the start of 2015, Cubans who receive remittances from abroad or convertible pesos by other means are quick to exchange their money into the national currency. Those who receive larger amounts – on the order of 100’s of CUC, in general the owners of more thriving private business — prefer to use the black market to exchange their funds into US dollars. The common denominator is that nobody wants to hold CUC money, which, until recently, was in high demand and CADECAS would even often run out of.

Announcement of a new national currency bill being issued into circulation in February, in 200, 500 and 1000 peso denominations, coupled with the ability to access the former “hard currency market” with either money, has sounded the drum-roll in people’s psyche as a prelude to the much anticipated monetary unification. People fear that an official changeover will take place that will carry penalizing fees that will cause serious losses to people’s pockets.

Fear is running throughout the population that an official changeover will take place suddenly, with extremely high fees that would produce serious loses to their pockets

The expectation is felt, by osmosis, in the capital’s agricultural trade networks, especially in meat markets that are not “state-owned”, where either one of the two currencies was accepted a few weeks ago. “Mother of Mercy, give me national currency!” is the butcher’s cry atCombinadito de Sitios in Centro Habana when a customer brings out 20 CUC to pay for a cut of pork meat whose price these days of non-ration cards has risen to 45 Cuban pesos per pound. “Country farmers don’t want CUC, my brother, they have a lot of money** and are really afraid of the monetary unification. They won’t sell me meat unless I pay in national currency”.

Something similar is happening with peddlers with street carts, who still accept payment in “convertible” currency for retail sales, but their wholesale suppliers are demanding payment in national currency for their products. A street peddler in my neighborhood states “farmers have high incomes and almost all producers have accumulated large sums. None of them wish to lose when the currency is unified”.

The lack of information and clarification from the official media creates uncertainty and speculation in the population.

It is evident that, once more, the lack of information and clarification on the part of the official media are causing uncertainty and spreads speculation throughout the population, giving way to obstacles such as the (unexplained) shortage of cash in the CADECA, increasing the demand for US dollars in the black market foreign exchanges.

With the imminent introduction of the new denomination bills, clear evidence of the very high inflation rate in Cuba, nothing is known about a monetary unification that -according to official notification- will be gradual and will “not affect” Cuban pockets. For now, it is expected that, when it takes place, the official exchange rate of 25 pesos in national currency for each CUC will not continue, a transaction with which the CADECA and the state commercial networks have operated to date. Our experience, after decades of deceptive monetary maneuvers, has motivated the popular wisdom so that, already, before the dreamed about monetary unification, Cubans are shedding was has been the last few years’ supreme sign of Cuba’s status: the CUC.

Translator’s notes:

*See here for a longer discussion of the history of Cuba’s currencies and the plan to move to a single currency. Briefly, Cuba has two currencies: Cuban pesos, also calledmoneda nacional (national money), abbreviated CUP; and Cuban convertible pesos, abbreviated CUC. In theory CUCs are a hard currency, but in fact, it is illegal to take them out of Cuba and they are not exchangeable in other countries. Cubans receive their wages and pensions primarily in CUPs, with wages roughly the equivalent of about $20 US per month, and pensions considerably less. The CUC is pegged 1-to-1 to the American dollar, but exchange fees make it more expensive. The CUP trades to the CUC at about 24-to-1.

**It has been a common practice in other tightly controlled countries, when new currencies are introduced, to limit the total amount of money people are allowed to exchange and/or to require documentation of the sources of larger sums. As the old currency becomes instantly worthless domestically and internationally, people who have been ‘hoarding’ it can see almost all their savings disappear. Cubans fear this could happen with the elimination of the CUC.

Translated by Norma Whiting