Cuba Moves Closer to Currency Unification
By: Cira Rodríguez
Although certainly not seen as the solution to the main challenges facing the Cuban economy, the unification of currency and exchange in Cuba is a reality growing ever closer and is viewed as a vital step in the process to update the nation’s economic and social model.
The purpose of this complex process is to attain some degree of monetary normality centered around the Cuban Peso – known as the CUP – and contribute to a redistribution of income so that each person or enterprise within Cuba can meet their consumption needs.
Statements made on various occasions by the Vice-President of the Council of Ministers Marino Murillo, make it clear that monetary unification will not, in and of itself, resolve the difficulties that presently exist, as purchasing power can only rise in accordance with an increase in production. Currency unification has been of considerable interest to all individuals, such as the selfemployed, small farmers and the general public, as well as entities such as companies, cooperatives and state-financed agencies, ever since the decision was made to create a time frame to make the single monetary and exchange system a reality. In keeping with all other decisive measures implemented in regard to the economic, social and political life of the nation, this concrete step will be implemented gradually and in stages because of the very serious implications that arise as a consequence.
As Murillo has indicated, this is an inevitable element in the re-establishment of the value of the Cuban Peso and its functionality as a currency, as a token of value, of circulation, a method of payment or an instrument of saving.
This is a measure which, when applied in conjunction with the rest of the policies currently underway as part of the updating process, will promote a degree of economic order and therefore a valid evaluation of its results.
Clarification, Confidence and Pressure The system of dual currencies, or of co-circulation as it is also known, arises when more than one currency circulates, with unlimited and freely defined power, performing monetary functions within the economy of a particular country. This can be associated with structural economic problems and according to Joaquin Infante, a consultant with the National Association of Accountants and Economists, in Cuba it is currently viewed as having originated from a combination of factors. In his view, the fundamental structural problem facing the country is the nation’s almost total economic dependency on external finance which is due to a combination of very high import requirements, low levels of financial reserves and the non-profitability of certain investments or export products.
Other factors include the economic, financial and commercial blockade of Cuba by the United States, diminished hard currency reserves, a drop in world prices for export products like nickel and a simultaneous increase in the price of imported goods including oil and food.