Cuba to ban use of U.S. dollar

[Subversive Pessimist]

Thanks to Disgustapated for posting this at newswire. I felt that this needs to be debated! I am so happy right now! You just got to read this! :D

Cuba to ban use of U.S. dollar


Last Updated Tue, 26 Oct 2004 05:52:30 EDT
HAVANA - Cuba is moving to end circulation of the widely-used U.S. dollar, a response to tighter American sanctions on the communist island.
A decree issued by Cuba's Central Bank says all cash purchases must be made using convertible pesos after November 8.
"Beginning on November 8, the convertible peso will begin to circulate in substitution of the [U.S.] dollar throughout the national territory," said President Fidel Castro in a written message read by an aide.
Cuba made the U.S. dollar legal tender following the collapse of the Soviet Union in 1993.
Cubans and tourists wishing to exchange American dollars will have to pay a 10 per cent commission charge. The exchange charge will not apply to other currencies, including the Canadian dollar.
·
In his message, Castro asked Cubans to tell relatives living abroad to send them money in other foreign currencies, such as the euro.
The rule, which applies to Cubans, foreign residents and tourists, comes in response to tightened U.S. sanctions.
In May, Washington announced increased caps on how much money could be spent on the island or sent to Cubans from the U.S.
"The empire is determined to create more difficulties for us," said Castro, referring to the U.S.
Castro, who appeared on television for the announcement, had his arm in a blue sling after falling last week. The 78-year-old fractured his arm and knee after stumbling on steps following a speech at a graduation.

Written by CBC News Online staff


Link (http://www.cbc.ca/story/world/national/2004/10/26/cuba_dollar041026.html)


How do you think this will affect the Cuban economy?

[Commie Girl]

This is most excellent! It won't affect tourists, since there will not be a surcharge on the rest of the world changing money, and will equally distribute money to the Cuban people as a whole!

[Subversive Pessimist]

Money is actually not distributed "equally" in Cuba. Those who work in the tourist business make much more money then ordinary workers.

[Commie Girl]

Yes, that is true, but with the elimination of the U$ dollar, there will probably be much less disparity....when I was in Cuba, even those working in the tourist industry shared most of what extras they recieved.

[Subversive Pessimist]

I hope so too.

I've heard from before that the Cuban people shares a lot. Do you know iif that is because of the government in Cuba, or was it like that before Batista came to power?

How was your trip to Cuba? Did you like it?

[redtrigger]

It is about time Cuba ballsed up to the US, they have had a trade embargo on them for how long now. Anyway, all around good news.

Speaking of the dollar, did anyone hear Kerry's sollution for solving the problems with the economy?

Print more money! :lol: all it will cause is inflation.

Also further discontent :)

[Anti-Capitalist1]

I totally agree with this policy being enacted in Cuba. It's only fair. Oh, and redtrigger, like your sig, can't tell you how many cappies I've heard rant on Lennon for being a communist.

[Palmares]

Originally posted by [email protected] 27 2004, 01:59 PM
Speaking of the dollar, did anyone hear Kerry's sollution for solving the problems with the economy?

Print more money! :lol: all it will cause is inflation.

Also further discontent :)
Sorry to go off topic for a moment, but does Kerry propose to deregulate the printing of money, or simply to increase the quotas?

Whichever it is, nevertheless is quite bewildering to me. It will only devalue their currency. It really does sound like something a mafia boss would do (ie counterfiet money = more currency).

In regards to Cuba banning the US dollar, I have no problem with it at all (I dislike the strangehold of the US dollar worldwide), but there is something that caught my eye:

Cubans and tourists wishing to exchange American dollars will have to pay a 10 per cent commission charge

The only reasoning I can currently see in doing this would be the fact that, since the US dollar is the most widely used and (previously) accepted currency in Cuba (not to mention the world), it would be a hassle exchanging this currency for Cuban pesos so much without some sort of loss. If that is not the case, is it simply (as it says) a "commission"?

I smell capitalism...

[Fidelbrand]

Wish to hear what the Cubans say on this issue.

[Fidelbrand]

Originally posted by [email protected] 27 2004, 01:15 PM
I smell capitalism...
I think it depends on how the Cuban government deals with the use of that "commision".

[redstar2000]

I can't see that this step will have much economic effect, one way or the other.

But I very much like the psychological effect. As long as the American dollar was circulated in Cuba, it was not just a currency but a kind of mass propaganda for "bringing back the Americans".

It's good to be rid of that once and for all.

:redstar2000:

PS: Fidel's doctors must tell him to sit down when he delivers speeches from now on. :)

The Redstar2000 Papers (http://www.redstar2000papers.fightcapitalism.net)
A site about communist ideas

[h&s]

Hey has anyone thought about what would happen if all countries (bar the US of course) were to ban the use of the US dollar? What would happen if they were all to re-enter the US in a short space of time? What effect would it have on the economy?

PS: Fidel's doctors must tell him to sit down when he delivers speeches from now on. :)

As if he'll listen to them! :lol:

[fuerzasocialista]

It might have an effect on the Cuban economy in term of remittances sent to the island. But being that Dubya has enacted those Anti-Cuba laws on how much someone can send to their families and how often someone could travel, it might actually be a good thing. Dollars would have been scarce anyway. However, people could still send in the formn of Euros and British Sterling and so forth.

[fernando]

If I remember correctly the Euro was a stronger currency anyways...well it was last year :P

[fuerzasocialista]

Correct, the Euro is the stronger currency. However, I would imagine the great majority of remittances sent to Cuba come from the US which means that it would arrive in the form of dollars.

[fernando]

well maybe they should travel through Canada (because then you can go to Cuba more often or something like that), then change the money to Canadian Dollars and give that to their relatives

[Deniz Gezmis]

fernando, have you ever heard of a currency exchange? Besides, the funds are sent predomently by electronic form.

[BOZG]

Cthenthar,

That article doesn't make the 10 cent levy very clear. It could be possible that a 10c charge will be levied after the November 8th deadline.

[fernando]

Originally posted by [email protected] 27 2004, 02:55 PM
fernando, have you ever heard of a currency exchange? Besides, the funds are sent predomently by electronic form.
Well..I thought people in the US werent allowed to send any kind of currency from the US...well except for the small number they are allowed to send.

[Commie Girl]

The U$ is really unhappy!

Source (http://news.bbc.co.uk/2/hi/americas/3957223.stm)

Cuba move triggers war of words


Many Cubans rely on dollar remittances from relatives in the US
The US and Cuba have launched into another bitter war of words following Cuba's decision to ban transactions in dollars on the island.
Fidel Castro announced the ban, which takes effect in two weeks, in response to a tightened US embargo.

The US said the move demonstrated Cuba's "economic desperation"; later the Cuban central bank said the move had struck a "forceful blow" at the US.

Meanwhile, queues have begun forming as ordinary Cubans try to change money.

The new measure, announced on Monday, will see dollars banned in commercial transactions in Cuba.

Instead, "convertible pesos", pegged one-to-one against the dollar and available only in Cuba, will be used.

The dollar will not become illegal tender, but Cubans and tourists will have to pay a 10% charge to convert dollars when the measure takes effect on 8 November.

Our correspondent in Havana, Stephen Gibbs, says this measure will enable it to receive and control far more of the hundreds of millions of dollars that tourists and Cubans living abroad bring or send here every year.

'Typical Castro'

Assistant US Treasury Secretary Juan Carlos Zarate called the Cuban move "an act of economic desperation".

"In typical Castro fashion, his solution to this problem is to implement a measure that will directly benefit and bring profit to his regime, while hurting the Cuban people," Mr Zarate said, according to AFP news agency.


Adam Ereli, US State department spokesman, said "it was a confiscatory measure that demonstrates that President [George W] Bush's policy is working".

In May, the US announced it was tightening its embargo on Cuba, with measures including capping the remittances sent to the island by Cubans in the US.

Their words drew a sharp response from Francisco Soberon, president of the Central Bank of Cuba (BCC).

"We feel very happy, very sure of what we have done, we have hit them where it hurts, we have withdrawn its currency in our national territory," news agency Efe quoted him as saying on Cuban TV.

"We have delivered a forceful blow [to the US] and we have at this time absolute monetary sovereignty," he said.

Cubans complain

Meanwhile, some Cuban people complained they were getting caught in the crossfire of an ideological battle.

"Fidel wants to get back the greenbacks and squeeze the people," said a cafeteria worker, Alfredo, who spoke to the news agency Reuters.

But some analysts said it made sense for Cuba to reduce its dependence on the dollar, which was legalised in Cuba in 1993 following its economic crash in the 1990s.

Many Cubans have become dependant on dollars for many goods, including some basic necessities. The convertible peso (popularly known as the "chavito") was originally introduced to plug the gap between supply and demand for dollars on the island.

The government is encouraging tourists to bring and remittances to be sent in other currencies such as euros.

Cubans began to queue on Tuesday to change dollars into pesos, and longer queues are expected on Wednesday when the convertible peso becomes available.

Other Cubans said they would open dollar accounts to hold their money.

[chebol]

Its quite a rational response to global events. The AIB (Europe's most profitable bank) has predicted a 20% slide in the value of the US$ compared to the Euro in the next 12 months. As Cuba relies upon the foreign currency received through tourism and remittances from cubans in the US in order to afford imports (especially oil), it makes sense to change your reliance on a weak currency. More so, now that the US is doing it's worst to try and make it impossible for Cuba to deal internationally in US$.
Tourists have long been encouraged to bring euros instead of US$, and they are more likely now that there will be a 10% surcharge. However, the remittances are a slightly different situation. Many US Cubans will continue to send US$, providing that much more $$ for the Cuban economy through this tax, but many are already calling upon their community to send only euros ("to hurt Fidel"). It is patently obvious that they have no understanding of economics, let alone politics, and I shudder for a Cuba run by such fools, if they were ever to return.
The Cuban economy needs to move away from US$ as it's main unit of foreign exchange, but this will never be possible while US Cubans keep sending billions to Cuba unchecked. The levy grants the economy a nose into these $$, while discouraging the use of US$ (which will not be illegal to hold in Cuba).
This move also cleverly snubs the US Government in the wake of it's tightening blockade (and immediately before the election), and makes it harder for US agents in Cuba to make use of their huge dollar payments to build dissent without going into a black market, making them even more liable to criminal charges- and more vulnerable.

[fernando]

Well the Europeans are pissed off at Cuba too because some Spanish and two Dutch dipshit went to Cuba with a TOURIST visa and then expect to perform political inspections and chat up with the opposition, hence they got kicked out of Cuba...and now Europe is upset..I mean its like a delegation from North Korea would go to the US to inspect human rights in their prisons (including Guantanamo Bay) and then chat up with the communist party there in the US :rolleyes:

[Deniz Gezmis]

and then chat up with the communist party there in the US
Would this be the same Communist Party that is backing John Kerry? :rolleyes:

[Severian]

Originally posted by [email protected] 27 2004, 08:55 AM
fernando, have you ever heard of a currency exchange? Besides, the funds are sent predomently by electronic form.
Actually, I think that most funds are brought back by visitors. One reason why the new travel restrictions will hurt Cuba economically. Fewer visits by Cubans in the U.S. to their families in Cuba = less money.

But Washington's statement - parroted by CNN and others - that this is a desperation move couldn't be more wrong. If anything was a desperation move, it was letting the dollar function as a second currency, in the very difficult situation following the collapse of the USSR. This and other moves against the dollar reflect the growing confidence of the revolution, as well as a response to Washington's latest attacks.