The dollarization of the economy in Cuba is progressing steadily, while the Cuban peso (CUP) and the Convertible Currency (MLC) continue to lose ground against the US dollar.
Daily, new establishments are adopting the exclusive foreign currency sales model, and the MLC is being relegated in the very stores where it was once the primary currency. Its price is dropping in the informal market while the dollar and euro strengthen.
A new store in Matanzas, located at the corner of Ayllón and Contreras, will start operating in dollars from August, as revealed by user Luis Ernesto Martínez González on social media. Currently, it operates in MLC, but as has happened in other areas of the country, it is expected to receive goods once the "green money" payment system is activated.
"Is there any meat?" Martínez asked during his visit to the store. "None," was the response. The supply is nearly non-existent, and the refrigerators are empty, as has been common in previous transitions toward dollarization.
"And if today's supply is limited, it's not the fault of the blockade," the Cuban joked, referring to the official narrative. "It's due to the correction of distortions," he explained, using government jargon.
The return of green cash
A few days ago, another Cuban content creator
Even the change is not given in dollars. The usual practice of the State in these cases is to pay the difference with candies and cookies because they claim they don't have bills or coins in foreign currency.
Another story shared by user Jorge de Mello highlights the same phenomenon. The MLC cards from Banco Metropolitano are no longer accepted at many retailers.
At a store on 26 and Zapata, his card was rejected on the grounds that only dollars were accepted. He tried to go to another nearby location, but there he was given the same response: "You must pay with dollars."
The salary is not enough to cover even ten dollars
The monetary reality for Cubans is worsening with the constant devaluation of the peso. Today, in the informal market, one dollar is valued at 390 CUP, one euro at 435 CUP, and the MLC at 220 CUP. With an average salary of 4,000 Cuban pesos, a worker can barely buy 10 dollars a month, a laughable amount considering the prices of dollarized food items.
In May, at least 85 stores in Cuba that operate exclusively in dollars were reported, without accepting MLC or Cuban pesos. Most of them are located in Havana, but this network of establishments has spread throughout the island. In June, the regime itself announced the opening of 50 new dollar stores.
During a session of the Round Table, the Deputy Minister of Domestic Trade, Aracelys Cardoso Hernández, admitted that the supply in national currency is virtually non-existent, and attributed the lack of availability to the "contraction of production and the foreign currency deficit."
Dolarization has been official since December
In December 2024, the Cuban government officially approved the “partial dollarization” of the economy. The document, presented by Prime Minister Manuel Marrero Cruz to the National Assembly, authorizes the use of cash dollars and specific cards in sectors such as retail, airports, clinics, optical shops, and state stores.
The strategy also allows agro-producers and manufacturers of exportable goods to be paid in foreign currency, with the goal —according to the regime— of replacing imports and reviving the economy. However, in practice, what prevails is a dual economy where access to basic goods depends on access to dollars.
While the people face empty refrigerators and sweets used as change, the so-called “correction of distortions” seems to be just another step towards the exclusion of those who do not receive remittances or cannot access the increasingly unreachable U.S. dollar.
Frequently Asked Questions about Dollarization in Cuba and the Use of Foreign Currency
How is dollarization affecting the Cubans?
Dollarization is creating a dual economy in Cuba, where access to basic goods depends on access to dollars. Many Cubans are struggling to acquire essential products, as dollar stores do not accept Cuban pesos or freely convertible currency (MLC). This situation has exacerbated social inequalities, excluding those who do not receive remittances or cannot access the US dollar.
What is the Freely Convertible Currency (MLC) and why is it losing relevance?
The Freely Convertible Currency (MLC) is a virtual currency used in some Cuban stores, initially introduced to attract foreign currency. However, with the increasing dollarization of the economy, the use of MLC is declining, as stores are transitioning to the exclusive acceptance of dollars. This has generated confusion and discontent among Cubans who still hold funds in MLC, as they cannot use them in the new dollar-only stores.
Why is the Cuban government promoting the partial dollarization of its economy?
The Cuban government is promoting dollarization to attract foreign currency and reactivate the economy. The measure aims to alleviate the economic crisis and the shortage of basic products. However, the strategy has been criticized for increasing social inequality, as only those with access to dollars can benefit from the offerings in these stores.
How does dollarization affect the informal currency market in Cuba?
The dollarization has impacted the informal currency market in Cuba, resulting in fluctuations in the exchange rates of the dollar, the euro, and the MLC. Despite the reduction in stores that accept MLC, its value has shown temporary increases due to the high demand for products in this currency for resale in Cuban pesos. However, the long-term trend indicates a preference for the dollar, in line with government policy.
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