Andrea Rodriguez | The Associated Press | January 15, 2015
A Cuban Central Bank resolution published Thursday said the new banknotes will extend the range of the current bills, which only reach 100 pesos.
Most Cubans earn and buy goods in local pesos worth about 4 U.S. cents apiece. Tourism, one of the island’s main sources of foreign exchange, operates on the convertible peso, a special currency worth roughly one U.S. dollar.
The double currency allows Cuba to theoretically split the country between a realm of highly subsidized prices in Cuban pesos and a convertible-peso economy where prices more closely resemble those of U.S. or European cities. But the system has led to economic distortions and created a new class of privileged Cubans with access to convertible pesos.
Cuba’s government announced in 2013 that it would eliminate the double currency but did not set out a timetable for the switch.
Central Bank Vice President Francisco Mayorbe told state newspaper Granma that in recent months a lot of stores that sell in convertible pesos have started accepting local pesos, with the price set after establishing the exchange rate.
This means that customers and businesses must increasingly handle larger quantities of cash, a problem accentuated by the fact that the country’s largest banknote, the 100-peso bill, is worth about 4 U.S. dollars.
Barbara Soto Sanchez, an official with state company Cimex, said most sales are carried out with 20- or 50-peso bills, which makes buying expensive products like electrical appliances or furniture difficult.
“To buy them, the customer has to bring in a large quantity of cash under conditions that are not always optimal,” Soto Sanchez told Granma.