World
4:19 am
Wed October 23, 2013

Cuba Announces Plans To Change Currency System

Originally published on Wed October 23, 2013 5:47 am

Transcript

DAVID GREENE, HOST:

In Cuba, President Raul Castro is continuing his uphill effort to revive the economy and overhaul the socialist system he inherited from his brother, Fidel.

Nick Miroff reports from Havana, his latest move is to scrap a dual currency system that made little sense to locals or visitors.

NICK MIROFF, BYLINE: Two types of legal tender circulate on Cuba's streets, but neither of them has any value on international markets. The first is the Cuban peso, a virtually worthless currency that most state workers receive and is good for bus fare and basic food staples but little else.

Then there is the convertible peso or CUC that Cubans call the kook and whose exchange rate is fixed to be worth more than a U.S. dollar. It's the currency of the tourist economy, introduced during the 1990s to substitute for dollars, and it is the only thing accepted at state-run stores selling imported food, appliances and just about everything else.

Economists have long argued that the twin currency model was hobbling the Cuban economy and making a mess of accounting ledgers at state-run companies. Now the government has released a statement saying it will gradually eliminate the convertible peso, and give Cubans plenty of time to trade in the soon-to-be obsolete currency.

Analysts expect this will probably drive down prices for tourism, while hopefully give ordinary Cubans a modest boost in purchasing power. The Cuban peso's exchange rate against the U.S. dollar will continue to be set by the government.

For NPR News, I'm Nick Miroff in Havana. Transcript provided by NPR, Copyright NPR.