Cubans Kiss Greenbacks Goodbye

Without hurting its own travel industry and rather feeling overjoyed that European travelers won’t have to change their currencies in U.S. dollars, Cuba is putting an end to the 11-year reign of the gringo notes in its economy.

On October 25, Cuban President Fidel Castro announced that U.S. dollars will cease their circulation in the national territory and will be replaced by Cuban convertible pesos (CUC) as early as November 8.

A decree issued by the Cuban Central Bank (BCC) stipulates a 10 percent surcharge on all dollar-to-convertible-pesos exchange transactions beginning on that same date.

However, the new decision does not penalize the possession of greenbacks or any other hard currency, and permits Cuban nationals to own any amount of dollars without breaking the law.

The new measure will be applied to both local residents and foreign visitors for purchases of goods and services in stores, hotels, bars, cafeterias, taxis, car rentals and any other outlet that used to operate in bucks.

The BCC’s ruling has put an end to over a decade of economic reforms that made the U.S. dollar the currency of choice for most Cubans after the collapse of the Soviet Union and its Eastern Europe allies left the island nation’s economy deeply in shambles.

Cuban authorities explained the new decree comes on the heels of recent pressures Washington has exerted on foreign banks to prevent Havana from making money deposits in U.S. dollars overseas.

Back in May, the U.S. State Department imposed a $100 million fine to United Swiss Banks (USB) for using the U.S. Federal Reserve Bank to replace $3.9 billion in old bills coming from Cuba.

As part of this policy, Cuba has suggested those nationals living in other countries to send money remittances to their relatives on the island in Canadian dollars, Swiss francs or British pounds, currencies that won’t be subjected to the 10 percent surcharge.

The substitution of U.S. dollars for convertible pesos (one peso is exchanged for one U.S. dollar) won’t put on the brakes on tourism because three quarters of all vacationers coming to Cuba hail from the euro zone and Canada, the country’s Tourism Ministry asserted.