Cuba to abolish two-currency system

Cuba has announced it will abolish the two-currency system currently being used in the country. From the BBC website:

Since 1994 Cuba has had two currencies, one pegged to the US dollar and the other worth only a fraction of that. The more valuable convertible peso (CUC) was reserved for use in the tourism sector and foreign trade. Now its value will be gradually unified with the lower-value CUP, ending a system resented by ordinary Cubans.

The Cuban economy is almost entirely state-run and the tourism sector has boomed since the collapse of the Soviet Union plunged Cuba into economic isolation and hardship. The two-currency system was supposed to protect Cuba's fragile economy but angered locals paid in the much lower-value CUP and denied access to goods only available for those with convertible pesos.

The policy exacerbated the creation of a two-tier class system in Cuba which divided privileged Cubans with access to the lucrative tourist and foreign-trade sectors from those working in the local economy - all-too-visibly contradicting Cuba's supposedly egalitarian society. The council of ministers has approved a timetable for implementing "measures that will lead to monetary and exchange unification", the official Communist Party newspaper Granma said.

Unification is "imperative to guarantee the re-establishment of the Cuban peso's value and its role as money, that is as a unit of accounting, means of payment and savings", it said. It gave no details of how quickly the change would be implemented, though Reuters news agency quoted Cuban economists as saying it would take about 18 months.