Cuban convertible peso

economic-dictionary

The Cuban convertible peso (CUC) is one of the currencies that Cuba has for transactions abroad and for foreigners in the national territory.

Along with the US dollar, the Cuban convertible peso (CUC) is the most widely used currency in Cuba.

Why are there two currencies in Cuba?

With the achievement of a monetary system of two currencies, the weakness of the economy and the null competition of the country with the outside are revealed. As well as obtaining foreign currency with which to operate in the purchase of raw materials abroad.

Since the Cuban peso has a poor value against the dollar or the euro, the arrival of foreign demand could lead to high inflation. In this way, an inflation with which to further deplete the country's economy. Being, in addition, the only way to obtain foreign currency from abroad, creating and equating a strong currency with a strong currency (dollar or euro, with which they can be convertible).

These bimonetary systems are used in countries with financial crises, a currency of very low value (it cannot compete) and which is usually replaced by the users themselves by a stronger one that generates more possibilities of acquiring products. Therefore, de facto, there is a deception to the market and a disadvantage to national citizens. In this way, with a government that functions as a central bank with significant discounts.

History of the introduction of the Cuban Convertible Peso

With the fall of the Soviet bloc, Cuba suffered a huge economic crisis and stagnation until today. One of the norms of the planned socialist economy is the non-convertibility of the currency of each country, in such a way that there are no exchange rates, prices, free floating and conversion. It usually has a value around 90% of the value of the dollar. In this way, the remaining 10% is the "benefit" obtained by the government from the reserve and sale of this currency.

In this sense, since the real value of the official currency (Cuban peso) is very low, the Cuban government decided to create a currency that would allow, at the same time to carry out transactions with other countries, channel the resources obtained from abroad. This, fundamentally, through remittances from tourism, in such a way that, for activities with nationals of the country, their currency is used. While, on the other hand, with foreigners arriving in Cuba as well as purchases abroad, the Cuban convertible peso is used.

Tags:  history did you know what Commerce 

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