Cuban convertible peso
Encyclopedia
The convertible peso (informally called a chavito), is one of two official currencies in Cuba
, the other being the peso
. It has been in limited use since 1994, when it was treated as equivalent to the U.S. dollar: its value was officially US$1.00. On November 8, 2004, the U.S. dollar ceased to be accepted in Cuban retail outlets leaving the convertible peso as the only currency in circulation in many Cuban businesses. Officially exchangeable only within the country, its value was increased to US$1.08 on April 5, 2008, and reverted to US$1.00 on 15 March 2011. The convertible peso is, by the pegged rate, the eleventh-highest-valued currency unit in the world and the highest valued "peso
" unit.
(the currency Cuban citizens are paid in and used for staples and non-luxury items) and the U.S. dollar in combination with the convertible peso, which was used for tourism
and for luxury items. The Cuban peso
(CUP) can be exchanged to the convertible peso (CUC) at the exchange offices (CADECA), at a fixed rate of 24 CUP to 1 CUC (sell) and 25 CUP to 1 CUC (buy).; however, for state household book-keeping purposes, both pesos are valued at a 1:1 rate.
On 8 November 2004, the Cuban government withdrew the U.S. dollar from circulation citing the need to retaliate against further U.S. sanctions
. After a grace period ending on November 14, 2004, a 10% surcharge began to be imposed when converting U.S. dollars into convertible pesos. The change was announced some weeks beforehand and was extended by the aforementioned grace period (it has been claimed this was because the amounts of US dollars being exchanged were more than anticipated). This measure helped the Cuban government collect hard currency
.
When exchanging U.S. dollar banknotes a 10% tax is applied plus an exchange commission. The 10% tax is not applied to other currencies, bank transfers, or credit card payments.
For transactions using credit cards, the cards are charged in U.S. dollars plus an extra 3% service charge. (Credit cards issued by U.S. banks cannot be used in Cuba.)
Cuba
The Republic of Cuba is an island nation in the Caribbean. The nation of Cuba consists of the main island of Cuba, the Isla de la Juventud, and several archipelagos. Havana is the largest city in Cuba and the country's capital. Santiago de Cuba is the second largest city...
, the other being the peso
Cuban peso
The peso is one of two official currencies in use in Cuba, the other being the convertible peso...
. It has been in limited use since 1994, when it was treated as equivalent to the U.S. dollar: its value was officially US$1.00. On November 8, 2004, the U.S. dollar ceased to be accepted in Cuban retail outlets leaving the convertible peso as the only currency in circulation in many Cuban businesses. Officially exchangeable only within the country, its value was increased to US$1.08 on April 5, 2008, and reverted to US$1.00 on 15 March 2011. The convertible peso is, by the pegged rate, the eleventh-highest-valued currency unit in the world and the highest valued "peso
Peso
The word peso was the name of a coin that originated in Spain and became of immense importance internationally...
" unit.
History
From 1993 until 2004, the Cuban currency was split between the Cuban pesoCuban peso
The peso is one of two official currencies in use in Cuba, the other being the convertible peso...
(the currency Cuban citizens are paid in and used for staples and non-luxury items) and the U.S. dollar in combination with the convertible peso, which was used for tourism
Tourism
Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".Tourism has become a...
and for luxury items. The Cuban peso
Cuban peso
The peso is one of two official currencies in use in Cuba, the other being the convertible peso...
(CUP) can be exchanged to the convertible peso (CUC) at the exchange offices (CADECA), at a fixed rate of 24 CUP to 1 CUC (sell) and 25 CUP to 1 CUC (buy).; however, for state household book-keeping purposes, both pesos are valued at a 1:1 rate.
On 8 November 2004, the Cuban government withdrew the U.S. dollar from circulation citing the need to retaliate against further U.S. sanctions
Helms-Burton Act
The Cuban Liberty and Democratic Solidarity Act of 1996 is a United States federal law which strengthens and continues the United States embargo against Cuba...
. After a grace period ending on November 14, 2004, a 10% surcharge began to be imposed when converting U.S. dollars into convertible pesos. The change was announced some weeks beforehand and was extended by the aforementioned grace period (it has been claimed this was because the amounts of US dollars being exchanged were more than anticipated). This measure helped the Cuban government collect hard currency
Hard currency
Hard currency , in economics, refers to a globally traded currency that is expected to serve as a reliable and stable store of value...
.
Coins
In 1994, coins were introduced in denominations of 5, 10, 25 and 50 centavos, and 1 peso. 5 pesos (rarely seen) was introduced in 1999, followed by 1 centavo coins in 2000.Banknotes
In 1994, the Banco Central de Cuba introduced notes in denominations of 1, 3, 5, 10, 20, 50 and 100 pesos.The CUC and the U.S. dollar
Between April 2005 and March 2011, the convertible peso was worth 1.08 USD. The CUC is currently pegged to the U.S. dollar at 1:1, as it was between 1994 and 2005.When exchanging U.S. dollar banknotes a 10% tax is applied plus an exchange commission. The 10% tax is not applied to other currencies, bank transfers, or credit card payments.
For transactions using credit cards, the cards are charged in U.S. dollars plus an extra 3% service charge. (Credit cards issued by U.S. banks cannot be used in Cuba.)
See also
- Cuban pesoCuban pesoThe peso is one of two official currencies in use in Cuba, the other being the convertible peso...
- Central banks and currencies of the CaribbeanCentral banks and currencies of the CaribbeanThis is a list of the central banks and currencies of the Caribbean.There are a number of currencies serving multiple territories; the most widespread are the East Caribbean dollar , the United States dollar and the euro ....
- Economy of CubaEconomy of CubaThe economy of Cuba is a largely centrally planned economy dominated by state-run enterprises overseen by the Cuban government, though there remains significant foreign investment and private enterprise in Cuba...