Havana, December 10 Cuban President Diaz Canel announced on the 10th that Cuba will officially launch a monetary reform process, including currency and exchange rate integration, next year.
Diaz-Carnell said on a special program broadcast on Cuban national television on the same day that Cuba has the conditions to launch monetary reform from January 1, 2021. After the merger, the exchange rate of the Cuban currency peso to the US dollar is temporarily 24 pesos to the US dollar.
At present, Cuba has two legal tenders, the peso and convertible peso, of which the convertible peso is equivalent to the United States dollar. When the Cuban state-owned sector keeps accounts, 1 convertible peso is equivalent to 1 pesos, while at exchange points such as banks, 1 convertible peso is convertible to about 24 pesos.
Under the currency reform plan previously announced by the Cuban government, Cuba will restore the single exchange rate system, abolish convertible peso and retain peso to promote the efficient operation of the economy; the government will increase people’s wages, pensions and other incomes to cope with the possible depreciation of the peso after the currency is merged with the exchange rate; in addition, the government will cancel excessive Subsidies, changing “subsidized goods” into “subsidized individuals” in order to seek a reasonable distribution of wealth.
The Cuban government said that the existing exchange rate will be retained for at least six months after the start of the integration process, so that the population will have enough time to exchange and avoid affecting interests.
Diaz-Carnell said that the integration of currency and exchange rate cannot solve all Cuba’s economic problems, but it can stimulate labor motivation, improve productivity and improve the business system. One of the main risks of monetary reform is inflation that exceeds expectations, and the government will prevent speculative price increases.
Convertible peso, also known as the new peso, was born in 1994. Since then, Cuba has been implementing a two-track monetary and exchange rate system. In recent years, the Cuban government has been interested in promoting monetary reform, but progress has been slow because of its great impact on the economy and people’s livelihood.