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Cuban convertible peso

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The convertible peso (sometimes given as CUC$ and informally called a cuc or a chavito) was one of two official currencies in Cuba, the other being the Cuban peso. It had been in limited use since 1994, when its value was pegged 1:1 to the United States dollar.

Cuban convertible peso
peso cubano convertible (Spanish)
ISO 4217
CodeCUC
Subunit0.01
Unit
Symbol$, CUC or CUC$‎
Nicknamedollar, cuc or chavito
Denominations
Subunit
 1⁄100centavo convertible
Symbol
 centavo convertible¢ or c
Banknotes
 Freq. used$1, $3, $5, $10, $20, $50, $100
Coins
 Freq. used5¢, 10¢, 25¢, 50¢, $1
 Rarely used1¢, $5
Demographics
Date of introduction1994
Date of withdrawal1 January 2021
User(s) Cuba
Issuance
Central bankCentral Bank of Cuba
 Websitewww.cadeca.cu
Valuation
Inflation5%
 SourceThe World Factbook, 2006 est.
Pegged with1.00 CUC = 1.00 U.S. dollar
This infobox shows the latest status before this currency was rendered obsolete.

On 8 November 2004, the U.S. dollar ceased to be accepted in Cuban retail outlets and left the convertible peso as the only currency in circulation in many Cuban businesses. Officially exchangeable only within the country, its value was increased to US$1.08 in April 2005, but reverted to US$1.00 on 15 March 2011.[1] The convertible peso was, by the pegged rate, the twelfth-highest-valued currency unit in the world and the highest-valued "peso" unit.

On 22 October 2013, it was announced that the currency was to be scrapped.[2] On 10 December 2020, it was announced that monetary unification would take effect from 1 January 2021. From that date, the CUC was no longer accepted in many Cuban businesses; it could only be exchanged in banks or CADECAs (casas de cambios), or used in certain shops, for a six-month period.[3] On 15 June 2021, it was announced that the CUC would remain exchangeable in banks for a further six months but that no shops would accept them from 1 July.[4] The final date for exchanging CUCs was 30 December 2021.

History

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Main articles: Dollarization of Cuba and Dual economy of Cuba
 
A sign in 2016 informing that prices are in CUC but can be paid in CUP (cash and card admitted). Change was returned in CUC.

In 1981–1989, Cuba used so-called INTUR coins and cheques. Convertible foreign currency was exchanged into these cheques rather than the national currency, which could be used to buy some luxury goods not available for purchase in the national currency.

Also, from 1985, Banco Nacional de Cuba issued foreign exchange certificates of various types.

Because of the economic problems during the Special Period, the Cuban government allowed the possession of U.S. dollars (which had previously been illegal) and began selling goods and services in U.S. dollars, initially for tourism and for luxury items.[citation needed]. In 1994, they began issuing the convertible peso, to circulate together with the U.S. dollar.

This was separate from the Cuban peso (CUP), which was used for staple items. The Cuban peso (CUP) can be exchanged to the convertible peso (CUC) at exchange offices (CADECA) at a fixed rate. Since the early 2000s the rates have been 24 CUP to 1 CUC (sell) and 25 CUP to 1 CUC (buy);[1] but for state bookkeeping purposes, both pesos are valued at a 1:1 rate.[1]

On 8 November 2004, the Cuban government withdrew the U.S. dollar from circulation, citing the need to retaliate against further sanctions from the Helms–Burton Act.[5] After a grace period ending on 14 November 2004, a 10% surcharge began to be imposed when converting U.S. dollars into convertible pesos. The change was announced some weeks beforehand, and was extended by the grace period. It has been claimed that it was because the amounts of U.S. dollars being exchanged were more than anticipated.[citation needed] The measure helped the Cuban government collect hard currency.[citation needed]

 
Exchange rates in 2013 at the airport.
 
Gasoline pump showing prices in CUC (1.10 CUC/liter) in 2015.
 
Shop in 2016 showing prices in CUP and CUC.

From 2014, some state-owned shops began to set the prices in both CUC and CUP, and accept payment in either. The 10% surcharge on converting US dollars was removed in July 2020.

Cuba's economic difficulties since the end of 2019 have resulted in shortages of goods in CUP and CUC stores, the opening of stores priced in US dollars and only accepting payment by cards backed by foreign currencies, the waiving of the 10% penalty for exchanging US dollars, the resumption of US dollars as unofficial medium of exchange, and the plunge in the value of the CUC below US$1 in unofficial street exchanges.[6][7]

Coins

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In 1994, coins were introduced in denominations of 5, 10, 25, and 50 centavos and 1 peso. The rare five-peso coin was introduced in 1999, followed by the one-centavo coin in 2000.

Banknotes

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In 1994, the Central Bank of Cuba introduced notes in denominations of 1, 3, 5, 10, 20, 50, and 100 pesos. On 18 December 2006, the Central Bank introduced a new series of notes themed to "Socialist History and Achievements". The front of the notes are similar to its previous series, but on the back of the notes, instead of depicting the Cuban coat of arms on all denominations, each of the notes now has an individualized design.[8]

2006 Series "Socialist History and Achievements"[9]
Image Value Dimensions Main Color Description Date of issue Date of first issue Watermark
Obverse Reverse
[10] $1 150 x 70 mm Dark green, tan, and yellow Monument to José Martí in Havana Death of José Martí in combat atop a horse at the Battle of Dos Rios 2006 December 18, 2006 José Martí and electrotype 1
[11] $3 150 x 70 mm Red, pink, and light green Monument to Ernesto 'Che' Guevara in Santa Clara Battle of Santa Clara: tank, derailed train, and soldiers with grenade, machine gun, and rifle 2006 December 18, 2006 José Martí and electrotype 3
[12] $5 150 x 70 mm Green, orange and yellow Monument to Antonio Maceo in Havana Protesta de Baraguá: Cuban general Antonio Maceo Grajales and Spanish captain general Arsenio Martínez de Campos y Antón in hammocks 2006 December 18, 2006 José Martí and electrotype 5
[13] $10 150 x 70 mm Brown, blue and green Monument to Máximo Gómez in Havana Revolución Energetica (Energy Revolution): electric power plant, pick-up truck, and linesman 2006 December 18, 2006 José Martí and electrotype 10
[14] $20 150 x 70 mm Dark blue, light blue, and yellow/green Monument to Camilo Cienfuegos Operacion Milagro (Operation Miracle): eye doctors performing surgery and passengers deplaning a jet 2006 December 18, 2006 José Martí and electrotype 20
[15] $50 150 x 70 mm Purple, orange, and yellow Monument to Calixto García e Iñiguez in Havana Marchers carrying flags and banners that read “Trincheras de Ideas Valen Mas Que Trinchera De Piedra” and “La Batalla de Ideas” 2006 December 18, 2006 José Martí and electrotype 50
[16] $100 150 x 70 mm Red, orange, and bright yellow Monument to Carlos Manuel de Céspedes Bolivarian Alternative for the Americas (ALBA): satellite dish, map, woman and man reading, oil refinery 2006 December 18, 2006 José Martí and electrotype 100

CUC and U.S. dollar

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The convertible peso was officially pegged at US$1.00 from 1994 to 2005, at US$1.08 from April 2005 to March 2011, and again at US$1.00 since 2011.[1] Since the end of 2019 the CUC traded below US$1.00 in unofficial street exchanges.

From 2005, when U.S. banknotes were exchanged, a 10% tax was applied, plus an exchange commission.[1] The 10% tax was not applied to other currencies;[17] From June 2020 this 10% tax on US dollars was eliminated.

See also

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References

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  1. ^ a b c d e "Política Monetaria". Bc.gob.cu. Archived from the original on 2017-12-27. Retrieved 2011-09-30.
  2. ^ "Cuba to scrap two-currency system in latest reform". BBC News. October 22, 2013. Retrieved October 22, 2013.
  3. ^ Yaffe, Helen (10 February 2021). "Day Zero: how and why Cuba unified its dual currency system". LSE Latin America and Caribbean blog. Retrieved 2021-02-17.
  4. ^ "Información de Interés".
  5. ^ "Cuba's currency: Adios to the greenback". The Economist. 2004-10-28. Retrieved 2011-09-30.
  6. ^ "Opinion: The dollar determines Cubans' everyday lives | DW | 25.07.2020". Deutsche Welle.
  7. ^ "As Cuba seeks hard currency, dollar stores reopen after 15 years". Reuters. 28 October 2019.
  8. ^ Cuba issues new convertible peso series dated 2006 Archived 2012-10-06 at the Wayback Machine BanknoteNews.com. Retrieved 2012-06-12.
  9. ^ "Cuba issues new convertible peso series dated 2006". Banknote News. 2006-12-18. Archived from the original on 2012-10-06. Retrieved 2016-12-16.
  10. ^ "P-FX 46". Banknote.ws. Retrieved 2016-12-16.
  11. ^ "P-FX 47". Banknote.ws. Retrieved 2016-12-16.
  12. ^ "P-FX 48". Banknote.ws. Retrieved 2016-12-16.
  13. ^ "P-FX 49". Banknote.ws. Retrieved 2016-12-16.
  14. ^ "P-FX 50". Banknote.ws. Retrieved 2016-12-16.
  15. ^ "P-FX 51". Banknote.ws. Retrieved 2016-12-16.
  16. ^ "P-FX 52". Banknote.ws. Retrieved 2016-12-16.
  17. ^ "Centro de Promoción del Comercio Exterior y la Inversión Extranjera de Cuba - CEPEC". Cepec.cu. Archived from the original on 2011-07-20. Retrieved 2011-09-30.
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