Why does Cuba use two currencies?

Last Updated: March 13, 2023

For nearly 30 years Cuba used two official currencies: the CUP (national peso) and CUC (convertible peso). However, in January 2021 the country moved to using just the national peso. What does this mean for tourists traveling to Cuba today?

Background

The two currencies were called the Cuban Peso (CUP) and the Peso Convertible (CUC). Most tourists only did transactions in CUCs, as it was pegged to the dollar. For a long time, the U.S. dollar was an illegal second currency. However, it proliferated on the black market due to remittances.

The use of the U.S. dollar was finally legalized in 1993 and then replaced by the CUC in order for the state to reap the benefits of the dollar, as opposed to individuals on the black market. Controlled by the Cuban Central Bank, the CUC came about in the context of the Special Period, the years immediately following the fall of the Soviet Union and times of hunger and severe shortages for many Cubans.

The export of CUC was not allowed, so there was officially no CUC to buy outside of Cuba. If you were flying into Cuba, you would need to bring your country’s currency in with you to be exchanged at the airport or somewhere else in Cuba.

Conveniently for most travelers, the CUC was pegged to the dollar in value, so you didn’t need to do mental math gymnastics trying to calculate conversions at a shop or restaurant. However, the dual currency system created greater inequalities in Cuba between those who received remittances and those who did not. Furthermore, highly skilled state workers who were paid salaries in CUCs were incentivized to leave the profession and work in tourism instead, where they would have greater access to CUPs.

So, who used the CUP?

Most Cubans were paid in CUP. As you might have guessed, it was also worth considerably less than CUCs. Many tourists would pay for lunch what many Cubans earn in a month’s salary paid in CUPs. CUPs were designed to purchase goods in state owned stores where the goods are price controlled, however those who had access to both CUPs and CUCs could buy the cheaper subsided goods and goods from the black market. This left fewer goods for those who only could afford the state markets with CUPs.

Many of the state run stores failed to keep many basic goods in stock. The system was wildly unpopular and advantaged tourists rather than Cubans. Why? Put simply, Cuba’s entire economy practically depended on tourism and remittances. While the policy has changed today, the country still depends on tourism and remittances.

Related: 10 Things to Know Before Traveling to Cuba

Unification of the Currencies

In 2020, Cuba’s GDP fell dramatically as it struggled against the impacts of COVID-19. Unifying the two currencies had long been discussed, but it wasn’t until the shock and desperation during the global pandemic that the state finally had to act.

The state adjusted wages for state employees to reduce the impact of unifying the currencies. For example, the minimum wage state sector employees saw raises of 525% (Source: Yaffe, H. London School of Economics). The state also planned to raise the prices of state-owned goods, as well as pensions. To address other concerns, Cuba also increased social assistance. Fears of inflation loomed, however the prices of several key products were set by the state in order to better prevent inflation.

What currency do you need for your trip?

As a tourist, you will need the Cuban Peso. This is pegged to the dollar at a 1 to 24 rate, meaning 1 dollar = 24 CUPs. The monetary policy changes in Cuba mean the peso is not highly valued, especially outside of Cuba. It is still best to bring foreign currency (such as U.S. dollars) in with you and exchange them locally.

It is possible to exchange your currency at the airport, however you will find better rates elsewhere. The best person to ask is your accommodation host.

Officially, you should only do transactions with CUPs, however Cubans will likely accept U.S. Dollars or Euros in more informal settings such as for tips.

For U.S. travelers, your credit and debit cards will not work in Cuba. Bringing in enough cash for the duration of your trip is essential.

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