Cuba will progressively eliminate the dual currency system

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The two-tier system has created distortions and corruption that undermine an economy already weakened by the global pandemic and the US embargo.

Cuba will eliminate some subsidies, adjust prices and wages, and end the island's dual currency system as part of a far-reaching economic reform package, President Miguel Díaz-Canel reported. In a televised speech Thursday, Díaz-Canel said the government would provide more details in the coming days and weeks. The socialist island has been badly hit by falling tourism revenue since the covid-19 pandemic hit, and Díaz-Canel said the measures are a response to the recession.

At the center of the reforms is a plan to unify the island's currencies. Since 1994, tourists and diplomats have had access to the Cuban convertible peso, or CUC, which is pegged to the dollar. Most Cubans transact using the much weaker Cuban peso. The two-tier system has created distortions and corruption that undermine an economy already weakened by the global pandemic and the US embargo.

Díaz-Canel said that the government will readjust wages, pensions and prices, and will eliminate "unjustified subsidies. The government will gradually eliminate the use of food ration books, which have been basic elements of life since the Cuban Revolution.

The government has tried to simplify its monetary system in the past. In 2013, then-President Raúl Castro implemented plans to quickly end the dual currency system.