Convertible Peso Emerges Fortified

The following article by Raisa Pages is reprinted from the November 17 edition of Granma International.

"Not a single cent of the dollars collected as a result of the Central Bank of Cuba (BCC) Resolution 80 in response to the US aggression will be spent by our country in its commercial transactions. That money, which constitutes a significant sum, has the objective of guaranteeing the value of the Cuban convertible peso (CUC), the president explained in the Informative Roundtable TV program on November 16.

He pointed out that all the necessary steps were taken in this financial operation so that nobody would lose out and the interests of all citizens would be protected.

Resolution 80 was passed by the BCC in 2004 in response to US government measures to prevent Cuba exchanging USD for other currencies in European banks. Given the U.S. blockade, Cuba cannot make transactions in that currency due to the blockade imposed by the United States for over 40 years. A well-established Swiss financial institution has recently been given a one-million-dollar fine for doing so.

Dollars collected during the exchange operation are to be used to ensure the convertible currency, Fidel pointed out. He mentioned that the convertible peso is already being accepted by international airlines and companies investing on the island that have opted for changing their accounts in Cuban banks from dollars to the national currency.

Fidel pointed out that Cuban currency converted into hard currency will be increasingly accepted in the international market, and could be more so in the future, as the Revolution’s ideas become further developed.

He confirmed that those who deposited their dollars in banks or bought convertible pesos did the best thing that they could have done. Francisco Soberón, president of the BCC, stated that during the 18-day exchange operation, the total of dollars deposited in Cuban banks was the largest in the last 10 years, thus demonstrating citizens’ confidence in the Cuban banking system. Soberón pointed out that 2,580,068 financial transactions were made in 18 days (from last October 28 to November 7).

During that period, 203 tons of bills and coins were transported from the central bank vaults, and 246 million bills of different currencies and 40 million coins were handled, Soberón stated. Experts from international financial institutions have observed that the Cuban banking system will be strengthened by this financial operation, Soberón noted.

10% SURCHARGE ON U.S. DOLLAR

Exchanging U.S. dollars cash in Cuba involves a 10% surcharge from November 15, while the non-convertible peso has been slightly revalued. The Cuban government operation to replace U.S. dollars with convertible pesos began November 8. Now, stores, hotels, restaurants, taxis and all other services will not be available in U.S. dollars, as has been the case since 1993.

The convertible peso, established in the 1990s, has the same value as the dollar and is the only acknowledged currency on the island.

Convertible pesos will continue to be exchangeable with the dollar and other hard currencies according to the international market rate.

In addition to removing the U.S. dollar from circulation, starting November 15 it will be penalized by a 10% surcharge in terms of exchange, with the objective of confronting the costs and risks of Cuba handling this currency, provoked by the measures of the Washington government in its desire to crush the Cuban Revolution.

Therefore a one-dollar bill will now be exchanged for 90 centavos of a convertible peso and for 23.4 non-convertible Cuban pesos which, to date, were exchanged for 26 to one dollar in the Cuban exchange bureaus known as Cadecas.

The measure was announced by President Fidel Castro on October 25, in response to U.S. measures to prevent Cuba depositing dollars in foreign banks for its commercial obligations.

"All bank accounts in U.S. dollars, in convertible pesos or in other currencies are totally guaranteed, and no surcharge on monies deposited in the banks will be subject to the surcharge," assures the Banco Central resolution.

The resolution establishes that the 10% surcharge will only apply to U. S. dollar exchanges in cash, and not to check transactions or withdrawals from bank accounts, while there will be no penalization on exchanges of other hard currency accepted in the country.

Alongside the euro, Swiss francs, GB pounds sterling and the Canadian dollar, all accepted in the island’s exchange bureaus, Japanese yen, Venezuelan bolivares and Mexican pesos can be changed at Cuba’s largest bureau, which has opened in Havana.

The demand was so great that the government decided to postpone for one week the application of the surcharge on cash dollar changes, initially anticipated for November 8.

The government has discounted the idea that the operation could negatively affect the hundreds of thousands of Cubans who receive remittances in dollars and has recommended that such monies be sent in euros or other convertible currency.