Cuba will circulate higher-denomination peso bills starting in February as the communist-run nation works toward unifying a dual monetary system that has been in place for the last two decades, official media said on Thursday.
Bills of 200 pesos, 500 pesos and 1,000 pesos will be added, the official daily Granma reported, citing a decree law. Thus far, the biggest-denominated bill has been 100 pesos.
Cuba’s convertible peso (CUC) is pegged to the U.S. dollar, while the local peso (CUP) is valued at $0.04, angering a population which is paid in the latter but often has to make purchases in the former.
The dual currency complicates accounting, the evaluation of performance, and trade for state companies. Neither currency is legal tender outside Cuba.
“(Unification) is imperative to guarantee the reestablishment of the Cuban peso’s value,” the government said when it announced plans to gradually eliminate the CUC more than a year ago as part of reforms aimed at improving the Soviet-style economy’s performance. Since then, Cubans have increasingly been able to use either currency at state-run retailers, compared to previously, when only CUCs were accepted.
A refrigerator sold for 1,000 CUCs can now be purchased for 25,000 pesos, but in a land where cash is used more often than checks and credit cards, this has created problems for consumers transporting the cash and clerks who must count it.”Little by little, this problem should be eliminated, since when it is necessary to make a large purchase, consumers can use larger bills,” Francisco Mayobre, a senior Central Bank official, told Granma.
By the end of this year, the government plans to have almost every retail outlet in the country using either currency at the exchange rate of 25 to 1, before eliminating the CUC.