The Central Bank of Cuba will add new anti-counterfeiting measures to the 20, 50 and 100-peso bills in apparent preparation to upgrade the value of the Cuban peso, now worth about four U.S. cents.
Cuba’s government announced in October that it would unify its two official currencies: the peso, or CUP, and the convertible peso, known as a CUC and equal to 25 CUPs. It has given no date or further details for the change.
Counterfeit CUCs have been turning up in Cuba regularly almost since their introduction in 1994. Havana residents say that fake CUPs are less common, apparently because of their lower value.
A 100 CUP-bill, now worth $4, would be worth $10 if the currency is revalued to 10 to the CUC, as predicted by an island economist in a recent report. Cuba is also expected to introduce higher denomination bills after the currency unification.
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The bank’s announcement Tuesday made no mention of the unification plans, but the introduction of new anti-fraud measures in the higher denomination CUP bills will make them more difficult to counterfeit.
“The Central Bank of Cuba informs the population about the coming emission of bills in the national currency (CUP) with new security measures,” said the bank statement, which went on to detail the changes.
A new watermark with each bill’s denomination will be added to the 20, 50 and100 CUP bills, the announcement said, and the current watermark will incorporate an image of the historical figure on the face of the bill. All bills in circulation will remain valid, the bank added.
Cuba’s largest denomination bills are the 100 CUP and CUC bills. The country also has had CUP bills in denominations of one, three, five and 10.
The dual currency system in place since 1994 created distortions in the economy that ruler Raúl Castro now wants to eliminate. Most salaries are paid in CUPs, but imported goods and many locally made items in short supply are usually priced in CUCs.
The currency unification, which analysts expect to be completed in 2015 or 2016 with the elimination of the CUC, would affect consumers as well as state enterprises that use imported supplies and export goods at widely varying currency exchange rates.
Economist Pavel Vidal has predicted the government will unify the currencies at a rate of 10 CUPs per CUC — the same rate set by law for employees of the foreign firms that will operate out of a special economic development zone in the port of Mariel.
Some Cubans already have been trading their CUCs for CUPs or U.S. dollars in hopes of avoiding any losses when the currencies are unified. Authorities have vowed that no individuals will suffer as a result of the change.
Former ruler Fidel Castro started printing CUCs to soak up foreign currencies after he opened the doors to mass foreign tourism in the early 1990’s. He also legalized holding U.S. dollars, previously punishable with several years in prison.
The black market exchange rate spiked to more than 140 CUPs to the CUC as Cuba tried to recover from the loss of the Soviet Union’s massive subsidies in the mid-1990s. But the government-set rate of 25-to-1 held relatively steady in recent years.
Foreign visitors who want to exchange $100 U.S. — now again not accepted in legal trade — receive 87 CUCs at the state-run CADECA currency exchange shops because the government imposes a 13 percent fee on transactions on dollars and no other foreign currency. But they can easily get 100 CUCs on the black market.