{"id":227611,"date":"2020-09-16T14:12:56","date_gmt":"2020-09-16T18:12:56","guid":{"rendered":"https:\/\/oncubanews.com\/en\/?p=227611"},"modified":"2020-09-16T14:12:56","modified_gmt":"2020-09-16T18:12:56","slug":"is-day-zero-approaching-for-the-cuban-economy","status":"publish","type":"post","link":"https:\/\/oncubanews.com\/en\/cuba\/economy\/cuban-economy\/is-day-zero-approaching-for-the-cuban-economy\/","title":{"rendered":"Is \u201cday zero\u201d approaching for the Cuban economy?"},"content":{"rendered":"

The arrival of the famous \u201cday zero,\u201d the day when one of the two Cuban currencies currently in circulation is eliminated, is a recurring theme these days for Cuban society. Since 2011, when the Lineamientos de la Pol\u00edtica Econ\u00f3mica y Social del Partido y la Revoluci\u00f3n<\/a> (Economic and Social Policy Guidelines of the Party and the Revolution) were approved at the 4th Congress of the Communist Party of Cuba, this was one of the objectives to be achieved for the Cuban economy. In the approved document, it was established as necessary to \u201cStrengthen the levels of macroeconomic policy coordination and conclude the studies to eliminate dual currency and improve exchange rate policy.\u201d This need has been endorsed in each of the plans and strategies subsequently approved. Although at other times the arrival of \u201cday zero\u201d has seemed imminent, now many economists, who have studied the subject, agree that everything seems to indicate that the days are numbered for the CUC (Cuban convertible peso). On this subject I talked with Juan Triana, Doctor in Economic Sciences, specialist in Cuban economy issues, columnist<\/a> for OnCuba<\/strong>.<\/p>\n

Do you think the time has finally come for monetary unification?<\/em><\/strong><\/p>\n

Yes, without a doubt, if we interpret the reiteration of the issue in the official media. That is why \u201cthere\u2019s fire where there\u2019s smoke,\u201d it seems that is the case. It\u2019s true that it\u2019s not the first time this has happened; however, this time, at least in my case, I perceive a greater insistence in the press.<\/p>\n

I would like to start by saying that, on monetary and exchange rate problems, there are many works written by the academy, which go back almost to the very beginning of the exchange and monetary duality, even with certain discrepancies between them regarding specific issues on this matter. But the truth is that there is a group of outstanding works, among them a book1<\/sup><\/strong> and several doctoral theses. Several authors also stand out for their seriousness and the depth with which they have dealt with the subject, almost all current or former professors of the Faculty of Economics of the University of Havana: Vilma Hidalgo, Yaima Doimeadi\u00f3s, Pavel Vidal Alejandro, Carlos P\u00e9rez-Souto, Carlos Lage Codorni\u00fa and Eduardo Hern\u00e1ndez. With this I mean that the academy was never oblivious to this great problem of the Cuban economy, and almost from the beginning it systematized its characteristics and proposed solutions on more than one occasion. In more recent years, other scholars have dealt with the subject and published valuable papers on it. Among them I would like to highlight articles by Pedro Monreal and again Pavel Vidal, Omar Everleny P\u00e9rez, Julio Carranza, Mauricio de Miranda and Ricardo Torres. There are other Cuban economists not so closely related to the academy who, through the networks, have also exchanged and projected on this subject. There I can list Joaqu\u00edn Benavides, Humberto P\u00e9rez and Fidel Vasc\u00f3s, for example, but the list is much longer.<\/p>\n

The exchange and monetary duality was one of the alternatives\u2014in this case, the one that was taken\u2014in the early 1990s, to try to generate an objective in certain sectors that would help the Cuban economy to come out of the crisis. Undoubtedly, there were other options, including a drastic devaluation of the Cuban peso against the dollar. It must be understood that in the beginning it meant allowing the circulation of the dollar in one segment of the population market and maintaining the Cuban peso in another.<\/p>\n

Then the CUC appeared at a rate of one to one with the dollar and with a regulation of use that did not allow more CUCs in circulation than backup dollars. And I think it\u2019s fair to say that it worked for a while.<\/p>\n

Money, says a historian of monetary affairs, is trust written on paper. While the rule of not issuing more CUCs than backup dollars was fulfilled, \u201cthe markets\u201d (that is, both the population and foreign and national companies) recognized it as good as the dollar. Then, between 2003 and 2004, other decisions were made that undermined that confidence: partial de-dollarization and the use of the CUC in all market segments, the growth of operations in CUC without backing in dollars and the consequent loss of confidence in said currency, the repeated supplier payment crises and the emergence of the famous CL (liquidity certificate), which guaranteed that the operations were backed in dollars or another currency. Then the CL also lost the confidence of \u201cthe markets.\u201d However, \u201cthanks\u201d to the existing segmentation, the population market remained relatively solid until a few months ago.<\/p>\n

Bad economic policies, someone once said, have generally been good policies that have lasted a long time and thus have been left out of context and away from new realities. That\u2019s why I think that even with all the risks it means this time, it\u2019s time and it should not continue to be postponed.<\/p>\n

Welcome Mr. Day Zero. Will the arrival of monetary unification work miracles in Cuba?<\/a><\/p><\/blockquote>\n