Saturday, May 24, 2014

The Consequences of Cuba’s Monetary Unification

The Consequences of Cuba's Monetary Unification
May 23, 2014
Dariela Aquique

HAVANA TIMES — Several months ago, the Cuban government officially
announced that the gradual process of reestablishing a single currency
system in the country would begin. People have had many expectations and
made numerous conjectures since.

The Cuban Convertible Peso (CUC) is currently valued at 25 and 24 Cuban
Pesos (CUP), for exchanging from and to CUP, respectively. This has been
rather bothersome for most citizens whose incomes are paid in CUP.

For a very long time, thousands of people in Cuba have been forced to
exchange their incomes for hard currency to be able to purchase
essential products such as soap, toothpaste, toilet paper, cooking oil,
razors and other articles.

A few years ago, markets that sell some of these products in Cuban pesos
were opened around the country, but the articles sold there are of lower
quality than those sold at hard currency stores (even though the prices,
calculated on the basis of the exchange rate, are equivalent).

I've always thought that the aim of this is to sell us the idea that
there are markets with differentiated prices aimed at sectors with
different incomes or financial possibilities. This is downright false,
because the prices are the same, the only thing that changes is the
currency. There is no such differentiation.

The only noticeable difference is the décor of the establishments.
Stores that sell products or offer services in CUC are almost always
comfortable and glamorous. Those that sell products in CUP, on the other
hand, leave a lot to be desired.

The existence of the two currencies created stark differences, between
those that could frequent or buy things at such and such a place and
those who could not.

Once there's only one currency in the country again, the CUP, I wonder
whether there will be investments in the restoration, redesign and
refurbishing of many establishments, such as restaurants, pharmacies,
cafeterias, stores and others.

Will prices actually be differentiated according to the quality of these
establishments? Will we begin to see many places fall prey to
deterioration, administrative neglect or, worse, mistreatment and
vandalism by certain customers, who will then be able to frequent and
purchase things at these places?

The reestablishment of a single currency system does not only demand a
monetary study for the fixing of prices or the changing of the exchange
rate, it also entails a number of social questions that will have to be

Source: The Consequences of Cuba's Monetary Unification - Havana -

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