Travel expert publishes a handy guide to understanding Cuban currency

Travel expert publishes a handy guide to understanding Cuban currency

Travel expert publishes a handy guide to understanding Cuban currency

 15 January 2022   Cubania Travel

You may have heard that Cuba's currency changed a year ago, and the locals and tourists alike have had to say goodbye to the so-called "dual currency system". Read on and find out what Lucy Davies from Cubania Travel recommends travellers to do to use currency in today's Cuba!

The Cuban Peso (CUP) - moving towards a simpler future?

Any basic research into the island of Cuba will reveal that historically, there have been two currencies in use on the island.

The CUP, or "Cuban Peso", which tourists only really used for street food, and the "Cuban Convertible Peso" or CUC.

The Cuban Convertible Peso was the so-called Cuban tourist currency, used daily by foreigners to pay for accommodation such as "casas particulares", buses, taxis, tours and food. However, since January 2021 it has been phased out, making way for the CUP to stand alone.

"The CUP was the everyday currency used to pay wages, utilities and basic foodstuffs. Meanwhile, the CUC was the currency used for everything else (buying imported food, luxury goods, homes, meals and accommodation)." - Cubania Travel

Theoretically, this sounds as though things are being simplified. However, that may not actually be the case.

It really is a case of "the future's bright, the future's digital". Slowly but surely, Cuba is moving towards a digital economy and though your bank cards may come in handy, there's still a way to go before Cuba is truly digital.

A complicated history of Cuban cash

As Lucy Davies, owner of Cubania Travel, tells us in the guide, a basic knowledge of Cuba's fascinating political history has actually influenced how money works to this day.

"After the collapse of the Soviet Union in 1991, the only money I could use was the USD. When the Soviet Union withdrew, Cuba lost most of its business partners and the economy collapsed. The CUP became worthless and the USD became the underground currency used to purchase anything of value.

"Such was the strength of the USD in Cuba, that the government eventually made it legal tender and - from 1993-2004 - and it became the most common currency to purchase goods (both in government stores and small privately owned businesses)." - Lucy Davies

As the USD strengthened, a new currency appeared in Cuba - you've guessed it, the "Cuban Convertible Currency" or CUC! It was essentially the USD with a Cuban mask on, but it was designed to replace the USD, which was withdrawn from circulation in 2004.

So, even though the CUC was stable, and even accepted as currency in Panama, its existence created a complicated double economy. For nearly 17 years the exchange rate remained CUC1:CUP24, just as the USD had been!

The problem that existed, however, was while the Cuban population was paid in CUP, most goods were only available for sale in CUC, but more about that later on in this article.

Withdrawing the CUC from circulation

On 1st January 2021, almost exactly a year ago, the CUP once more became the sole currency in Cuba.

Then, at the same time as the CUC was withdrawn, the Cuban Government started to digitalise the economy by introducing bank cards to the Cuban population and by creating telephone apps to allow for digital payments of utilities.

In general, most people were happy with the modernisation of their economy, but Cuba's currency problems didn't vanish as quickly as the CUC had on 1st January. You see, although the CUC had vanished, the need for foreign currency has not. So what was the plan?

"A new digital currency was introduced, called MLC (Moneda Libremente Convertible), aka the USD in digital clothing, and can be used to buy goods in stores using the newly issued bank cards Cubans now use. But here's the rub. While Cuban salaries are paid in CUP (which can be used to pay for utilities and basic foods), it can't really be used for anything else." - Cubania Travel

Anything essentials that Cubans want to buy, like medication or toiletries, are only sold in MLC, a currency which Cubans have to upload to their bank cards by buying expensive foreign currencies such as the USD, EUR or GBP, to name a few.

So what currency will you need in Cuba?

If you're following all this, you may be thinking that the last thing the Cuban government has done is to simplify things, and you'd be forgiven!

However, if you're planning on visiting the island, there's a really great tip you can take away from Cubania Travel's guide, and that is to bring Euros in small denominations with you, like €5, €10, or €20 notes. Why?

Yes, legal tender is CUP and prices are listed in either that or MLC but make sure you buy your food and drinks in Euros which will, in fact, work out much cheaper for you as many establishments like "paladares" or "casas particulars" will accept payments in Euros.

Don't forget your bank card either

Cuba's trying to modernise more and more quickly and to be fair, it is catching up with the digital world fairly quickly. The government know that this is the future and as a result, more and more government-owned establishments will accept bank card payments, and more ATMs are starting to appear.

The most important thing you can do before catching your flight is to check with your bank that your card can be used there. If it's not a card issued by an American Bank, you should be fine.

Although it seems complicated, surviving the Cuban currency crisis is not as scary as it sounds, and the friendly Cubans will always be willing to help if you have any questions.

It all just adds to the charm of the island!

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