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Cuba To Abolish Two-Tier Monetary System

The peso convertibles will be phased out in the next 18 months
10-23-2013  By: André Désiront
Cuba To Abolish Two-Tier Monetary System
Cuban president Raul Castro has announced that the country's two-tier monetary system is to be abolished. The peso convertibles - also known as the CUC - that is issued for tourists and is based on the U.S. dollar, will be done away with over the course of the next 18 months, giving the island nation a single currency, the Cubano Peso or the CUP.

Cuba is the only country in the world that issues two currencies. While the majority of Cubans are paid in "regular" pesos, whose value currently sits at four cents U.S., those workers in the tourism sector have access to the CUC through tips from tourists, creating social disparity between those working in tourism and those not connected to the tourism industry.

The average monthly income for a Cuban who does not make tourism tips, or remesas, is in the range of $15 to $20.

The announcement of the consolidation of the two currencies into as single currency was issued on Tuesday via the national news agency Granma. Details on how the government plans to consolidate the two currencies were not provided, however it did mention that the first stage of the change will affect companies.

Economists estimate that the process will inevitably bring down the value of the CUC, while bringing out a revaluation of the Cubano Peso.

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