Understanding Cuban Money in 2022
Cuba and Money
A year has passed since the Cuba got rid of its dual currency system. The CUC ( Cuban Convertible Peso ) has gone and the country now has a single currency economy.
Until 1st January 2021, Cuba had spent nearly 20 years living and working with 2 currencies, the CUP ( Cuban Peso ) and the CUC ( Cuban Convertible Peso ). The CUP was the everyday currency used to pay wages, utilities and basic foodstuffs. Meanwhile, the CUC ( pegged CUC1:USD1) was the currency used for everything else ( buying imported food, luxury goods, homes, meals and accommodation ).
The only Cuban currency nowadays is the CUP.
Which should make things more simple, right? WRONG!!!
Cuba is edging towards a digital economy and your bank cards may come in handy, but there’s still a way to go before Cuba is truly digital.
If you Google search official money advice you’ll learn that the CUP ( Cuban Peso ) is the only legal currency in the country and that the official exchange rate is USD1:CUP24.
But if you want to make the most of your trip ( and your money ) a little background knowledge goes a long way! Money has never been straightforward on this island. Anyone travelling to Cuba should get a basic understanding of what’s going on money-wise and rethink what spending money to bring.
Here’s my potted history of money matters in Cuba over the past 30 years. I will explain to you how Cuban money got to where it is now.
And why you should bring cash EUROS on any trip to Cuba.
The Soviet Era
For 30 years ( 1961-1991 ), Cuba’s Revolutionary economy was propped up by Soviet oil, Soviet investment and subsidised imports from Eastern Bloc countries. The Cuban Peso ( CUP ) had remained stable since the 1960’s and, although Cubans weren’t wealthy, the average wage covered everyday expenses such as rent, utilities, food, clothing and going out.
The Dollar Rules 1993-2004
I first went to Cuba as it emerged from the economic free-fall caused by the collapse of the Soviet Union in 1991. The only money I could use was the USD. Weird. 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 – it became the most common currency to purchase goods ( both in government stores and small privately owned businesses ).
CUC 2004- 2021
Legalising the USD must have been painful for Fidel Castro and his Revolutionary Government. But thanks to his pragmatism and the development of tourism, Cuba slowly emerged from the worst economic crisis in decades. The USD meant it could invest in the future of the country.
During the last years of the 20th Century a new currency appeared in Cuba, the CUC ( Cuban Convertible Currency ) which was , effectively, a USD dressed in tropical Cuban clothing. Pegged at USD1:CUC1 this currency replaced the USD, which was withdrawn from circulation in 2004.
Everything and everything was bought with CUC and although originally derided for being a “fake” currency, its stability meant that it could even be used abroad ( Panama, for example, accepted the CUC for purchases in the free zone ).
Even though the CUC was stable, its existence created a complicated double economy. For nearly 17 years the exchange rate remained CUC1:CUP24. The problem was that, while the Cuban population was paid in CUP ( an average monthly wage of less than CUP1000) most goods were only available for sale in CUC.
Stuff was really expensive for locals.
2021 – The Economic Reform
Which is why, for many years, everyone in Cuba talked about the need for economic reform, to remove the dual currency.
For reasons which few will ever understand, the Cuban Government eliminated the CUC in the middle of the Covid-19 pandemic. Cuba’s economy relies heavily on tourism, a source of much-needed foreign income and investment. The effects of the pandemic and the resultant economic crisis due to lack of tourism have only been sharpened by withdrawing the CUC , which began on 1st January 2021.
Now that the CUC’s withdrawal is complete, the CUP is, once again, the sole Cuban currency in circulation.
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 and other services.
So far so good and, for the most part, people are happy with the modernisation of their economy and the easier access to wi-fi which has made it possible.
The Cuban Convertible Peso ( CUC ) has vanished but the need for foreign currency has not. And so, in a monetary storyline which could have been plucked from The Emperor’s New Clothes, a new digital currency was introduced. It’s 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.
So far so logical. 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.
The shops with the good stuff ( imported food, medication, toiletries ) only sell in MLC, a currency which Cuban must upload to their bank cards by buying expensive foreign currencies such as the USD, EUR or GBP, to name a few. Which most Cubans can’t access unless, they have friends or family abroad who can send it to them.
The official rate of exchange is USD1:CUP24 but the black market rate is currently around USD1:CUP80.
So if you don’t have foreign currency you have to buy it on the black market at the black market rate. Which means that, for Cubans, life during the pandemic has become extremely expensive.
So what money should I bring to Cuba?
Good question! The legal currency is the CUP and prices are now displayed in this currency ( unless you’re buying in an MLC store).
Stay with me while I walk you through what this means in reality…
Since Cubans have to buy hard currency at black market rates prices in private restaurants ( paladares ) and accommodation ( casas particulares ) reflect these exchange rates and not the official rates.
Let me give you a real example, something which happened to me a couple of weeks ago:
I went to Juanky’s Pizza joint to buy 4 takeaway Margherita Pizzas, each costing me around CUP230. Convert that using the official rate and it works out at an exorbitant $9.58 per pizza, or nearly $40 for 4 pizzas. I mean it’s ok pizza, but it’s not that good!
When I looked slightly stunned by the bill, the waiter said “Cambiaste tus Euros por izquierda, verdad?” ( You exchanged your Euros on the black market, right? )
If I exchange my Euros using the black market rate ( currently EUR1:CUP90 ) then my pizza is suddenly a huge bargain at $2.55 per pizza!!
Which brings, finally, me to our advice….
Bring EUROS cash and bring them in small, useful denominations ( €5,€10 and €20 notes are the best).
You’ll buy food and drinks on your trip to Cuba and you’ll be able to do this using EUROS.
It’ll be the easiest and cheapest way for you to buy stuff in Cuba.
Cubania has already made agreements with many of our favourite paladares so that our clients will be able to pay in EUROS at a favourable exchange rate and take full advantage of the strength of the EUR against the CUP. How come we can do this? Because business owners need EUR to load onto their bank cards so that they can buy supplies! It’s a win-win 😉.
You may need some CUP but we recommend you exchange a small amount ( say EUR40 ) for incidentals. Needless to say, we recommend you exchange only at official exchange bureaux.
And bring your bank card too.
As Cuba hauls itself into the 21st Century, more and more Government owned establishments will accept bank card payments and more ATM’s will appear. Before heading to Cuba, check that your bank card can be used in country ( if your bank is US owned, then your card won’t work in Cuba due to the US Embargo on Cuba ). Don’t expect to use them much but do bring them.
You can use bank cards in government owned shops throughout the island ( to buy rum, coffee, souvenirs, cigars ) and you can use it in most large hotels and some restaurants too. Your bank card will also be accepted in the Duty Free Shops to stock up on cigars and rum as you leave Cuba too.
But for the time being, Cuba remains enchantingly cash friendly, its economy maddeningly complicated and the country incredibly welcoming in spite of it all…
To get more advice on travel to Cuba read our Travel Tips for Cuba 2022 story.