Even well-worn travelers will admit that in Cuba one needs to learn their ways anew. Dealing with money might be puzzling wherever you go, but Cubans truly put us to the test. With two alike looking, but totally not alike valued currencies, you better wake up and work your math quickly after landing.
After the fall of the Soviet Union which was maintaining Cuban economy for years of trade embargo, the country was abandoned to its luck. Forced by the circumstances of economic depression, Castro introduced the so-called Special Period in Times of Peace (periodo especial) which meant that Cubans had to give up many commodities they had grown used to during the considerably affluent years of soviet dependency. Many say it was only after the fall of the Berlin Wall in 1989 when Cuba truly reached its independence, but for its population it meant a miserable countrywide diet for years to come.
Creating a new, artificial currency called the Cuban Convertible Peso (CUC) in 1993 was one of the country’s measures to boost the local economy. Nowadays as during the vast majority of its existence, the CUC is pegged to US dollar at a 1:1 rate. On the contrary to Cuban Peso (CUP), the convertible one is destined to be used in tourism and for luxury items (usually meaning imported ones). This split between two national currencies of which Cuban Peso is worth over 20 times less, has caused much inequality in the local population. In recent years with ongoing privatization, many high-level professionals quit their state-run jobs to drive taxis or open up their own casas particulares (bed and breakfast), where they’re often able to earn their monthly salary within a day.
The Cuban Peso is used for staples and non-luxury items, whilst distribution is still partially handled through rationing. The supplies booklet gives every Cuban access to family minimums for the basic food products. CUP is generally used to pay for state-run services for Cubans like transportation, cinema or theatre (evening entertainment is considered a national right).
While Cubans use both currencies, tourists (yes, tourists – what Cuba needs now are affluent tourists, not avid travelers and you’ll be painfully proven this during your stay) will barely ever handle CUP. As said, most of the goods and services sold in CUP are state-run or co-financed, which means Cubans collectively have worked to make it affordable locally. Fair enough. Anyway, it’s always a good idea to have some spare pesos cubanos on you for a city bus ride or cinema. Bear in mind to change all your local money (both CUP and CUC) once you’re leaving the country since you can’t do it elsewhere. It is actually illegal to take CUP off the island.
That said, it’s absolutely understandable that according to Cuban double-standards, foreigners are charged significantly more that locals on most occasions. Nevertheless, don’t let yourself be ripped off!
Be aware that even though Cuba is generally an exceptionally safe country, foreigners are easy prey for an impressive variety of creative scams (some of which truly heart-breaking) or are often simply incredulously overcharged (read more in the upcoming article on pricing in Cuba). A rule of thumb: keep the two currencies separate and always check if your change has been given back in the right peso.