The E-Sylum:  Volume 11, Number 9, March 2, 2008, Article 24

POST-FIDEL CUBA RUSHES TO SWAP PESOS

[The Washington Post published an article this week about
the two-tier monetary system in Cuba, and how rumors of a
change in the system triggered a panic. -Editor]

Cubans swamped currency exchange offices Monday and early
Tuesday in a brief but intense speculative frenzy fueled by
rumors that new President Raúl Castro would end the island's
reviled dual currency system.

Hoping to make a quick profit, many Cubans traded the country's
valuable "convertible pesos" -- a currency primarily used by
tourists, foreign-owned businesses, the elite and black-market
vendors -- for the weak Cuban national peso, which is used
for the salaries and pensions of nearly all Cubans. The
speculators believed that Castro, who hinted about gradually
changing the dual money system after being named president
Sunday, would double the value of the weak national peso or
abolish the stronger convertible peso.

The money swapping became so intense that some exchange
offices ran out of national pesos, according to Cubans who
stood in line at the offices and other observers. Faced
with what amounted to a small-scale run on its banks, the
government aired a report early Tuesday on the morning news
program "Buenos Dias" emphasizing that any changes to the
money system would be gradual.

The money rumors began Sunday when Castro was named by the
National Assembly to succeed his ailing brother, Fidel, who
has not appeared in public in 19 months. In his nationally
televised acceptance speech, Raúl said his government would
"keep delving into the phenomenon of the double currency
in the economy. . . . To avoid traumatic effects or
inconsistencies, any changes related to the currency shall
be made with a comprehensive approach."

Cubans cannot use national pesos in the island's best stores,
which carry products -- such as beef, soap and cooking oil --
that are not available or are in short supply in state-run
stores. As a result, the dual monetary system has created
resentment among Cubans.

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  Wayne Homren, Editor

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