The Presumed End of Cuba’s Dual Currency

Vicente Morin Aguado (photos: Caridad)

HAVANA TIMES — A man (who was over 60 and with a plastic bag full of packets of detergent that he was trying to sell to me) commented quite clearly: “I don’t understand all this with us having two currencies. I buy these packets at the hard-currency store in convertible pesos and I sell them in domestic currency. I’m hoping to make a little profit, because to get these smaller packets you have to stand in line forever, and you can’t find them just anywhere.”

I thought to myself about how when I buy a pack of cigarettes at the corner store, using either of the two currencies, I always get change – except for when I pay with hard-currency CUCs, I’ll lose a little – roughly a peso (about 4 cents USD).

The logic is that if I didn’t take the time to go to the money exchange center beforehand, then that was my problem. In short, I just take the hit. A peso isn’t as much as the time, cost and trouble of going to an exchange center, which aren’t always open.

Actually, starting from when dollarization began back in the days of the fall of the Berlin Wall, followed by the institutionalization of the “Chavito” (hard currency CUCs), to the reform guidelines issued by the Sixth Party Congress” (which endorsed the popular demand to end the dual currency situation), we Cubans have had at least two currencies, and we’ve always been willing to trade with them according to our needs or depending on how many of each of them we possessed.

I don’t think we’re seeing the “beginning of the end of the dual currency.” Practice, the supreme criterion of truth, tells us that my friend selling the detergent was right with his simple reasoning. The “patently obvious” truth is that many people forget when it comes time to explaining issues, which are seemingly complex but are really quite simple.

What is money but the universal equivalent of all commodities? It is printed on paper according to the laws of the state and needs in light of the natural limitation on the movement of precious metals.  In grade school arithmetic we can understand that this involves a common denominator, therefore we can understand the position of the gentleman with the packets of detergent.

It’s the same to me if a TV costs 300 CUCs or 7200 CUPs (at an exchange rate of 1:24). Anyway, the important thing is to have the money, whether it comes from remittances sent from “the beyond,” or whether it’s earned by selling avocados or it’s the payout from “La Bolita” (playing the numbers).

In a day, the state could change this situation through an executive order (mathematically at least), but the trauma would be huge if we took into consideration the complicated accounting of a country marked by widespread corruption, where the economy would need to restructure itself internally before carrying out the simple act of transitioning to a single currency, where previously — and this is not a typo — the are four denominations.

Let me explain. In the popular sense, we have the Cuban Peso, or “domestic currency,” called CUP. But we also have the Cuban Convertible Peso, identified by the initials “CUC,” which is equal to the US dollar that was previously in circulation here.

There are, however, two more currencies: The ledger book CUC and CUP. In terms of business economics, at the level of bank accounts, these have values that don’t coincide with the concurrency at the street level.
In any case, this involves four currencies, which is a real puzzle for our economists.

Any hotel pays its workers in CUPs while charging tourists in CUCs (with both currencies in circulation). But they also carry out banking operations with these same denominations through checks or other variations in which tangible cash is never touched.

As all this is very disadvantageous to the overall economy, thus there’s consensus around the need to change this situation. I sincerely believe that the country (meaning us Cubans) wants to live with a single currency, which is now a palpable reality that is recognized in retail trade daily in both state and private commerce.

The time remaining until an executive order changes the current situation is a logical process of arranging elements on a complex plane of — if the expression fits — economic relations of this invention called “socialism” (which can’t ignore the market and its categories and therefore must address them responsibly, without fear and without reproach).

As I was recently told by a former student, who is now a university professor, we’re socializing poverty, but we must learn to create wealth in order to distribute it fairly. Socialism isn’t defined solely on how wealth is produced, but also in considering the most balanced way possible for distributing it.

Countries like Norway, Denmark and Japan, examples of nations with high United Nations Human Development Indexes (HDI), demonstrate one path.

I firmly believe (getting back to the subject), that it’s essentially a cultural problem.
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Vicente Morin Aguado. morfamily@correodecuba.cu