Euphemistically called the "special period" by the government, the crisis caused the devaluation of the historical Cuban peso
(CUP) and led to the emergence of the convertible peso (CUC) (NotiCen, May 5, 2005).
Some of the proposed, but still pending, reforms include the elimination of the rationing system instituted in 1961, the unification of the two currencies that currently circulate in Cuba (i.e., the Cuban peso
, or CUP, and the convertible peso, or CUC), and the creation of wholesale markets where nonstate producers (e.g., cooperatives, small-scale private enterprises, and self-employed workers) can legally obtain essential inputs at market prices in Cuban pesos
TOP TIP Cuba has two currencies - the convertible peso (CUC) and the Cuban peso
* Cuba has a dual currency: the Cuban peso
, which is not convertible into any foreign currency, and a convertible Cuban peso
(CUC), which is convertible into U.S.
So for the moment there is the convertible peso (CUC) and the Cuban peso
Vidal Alejandro's explanation of the complicated exchange rate system, and his proposals (including his assumption that unification should be at the current rate, which seems odd, given the current undervaluation of the Cuban peso
) offer an excellent basis for debate, and Rodrik's description of the benefits of a "shift to market incentives at the margin" to tackle "binding restraints," rather than wholesale reform, challenges some of the implicit assumptions about the benefits of liberalization that appear elsewhere in the book.
Currencies highlighted by this initiative are the Cuban Convertible Peso or CUC and the Cuban Peso
or CUP (national currency) whose exchange rate varies from 1 CUC to 24 CUP for the population and 1 to 1 in the entrepreneurial sector.
Stephen Hart contemplates Cuban santeria from the complexities of a double economy and points out the existence of a third, "supernatural economy" that intersects with the "money economy," itself bifurcated between the Cuban peso
economy and the more lucrative CUC/tourist economy and its "peso convertible" (worth 24 Cuban pesos
Unification is "imperative to guarantee the re-establishment of the Cuban peso
's value and its role as money, that is as a unit of accounting, means of payment and savings", it said.
In his first speech as president in February 2008, Raul promised to make the government smaller and more efficient, to review the potential revaluation of the Cuban peso
, and to eliminate excessive bans and regulations that curb productivity.
What it is likely to accomplish is the further flight from the Cuban peso
into convertible currencies such as North American dollars and European euros.