HAVANA (AP) Cuba's government announced Tuesday that it will take the first small, symbolic step toward eliminating a two-currency system that has become an uncomfortable manifestation of economic inequality on the island.
President Raul Castro said this year that the communist government must scrap the system, in which businesses driven by trade with foreigners use a currency known as convertible pesos that is pegged to the U.S. dollar. Most of the rest of Cuba's heavily subsidized communist economy, meanwhile, uses ordinary pesos worth about 5 cents each that cannot be directly converted into foreign currencies.
The system was designed to allow Cuba to receive hard currency needed for international trade from the outside world while insulating the rest of the communist economy from market influences.
Currently, Cubans who work in businesses that trade with foreigners generally receive higher earnings paid in convertible pesos and use that currency to acquire goods from stores and other establishments that only accept that money.
Those goods are more difficult to buy for many government employees who earn lower salaries in less valuable regular pesos, although a growing proportion of them have been receiving additional performance incentives in convertible pesos.