The shift towards dollarization in Cuba's economy is gaining momentum, with the Cuban peso (CUP) and Freely Convertible Currency (MLC) losing ground to the U.S. dollar. More and more establishments are opting for exclusive currency sales, sidelining the MLC even in stores where it once dominated. The informal market reflects this change, as the MLC's value drops while the dollar and euro strengthen.
A new store in Matanzas, located at the intersection of Ayllón and Contreras, is set to transition to dollar operations starting in August, as shared by user Luis Ernesto Martínez González on social media. Currently functioning in MLC, the store is expected to receive new goods once "green cash" transactions commence. When Martínez visited the store, he inquired about meat products, only to find empty refrigerators—a familiar sight during previous dollarization transitions. "And if today's offer is scarce, it's not due to the embargo," he quipped, referencing the official narrative. "It's because of the correction of distortions," he added, using government jargon.
The Return of Greenbacks
Recently, another Cuban content creator expressed frustration on TikTok over the inability to purchase meat products with money sent by her family abroad. She visited a dollar store hoping to find basic necessities, but encountered only empty shelves. Ultimately, she spent her funds on beverages, tomato sauce, and hygiene items. Even change isn't given in dollars; it's typically replaced with candies and cookies, as authorities claim a lack of foreign currency notes and coins.
Another account from user Jorge de Mello highlights the same issue. Bank cards in MLC from Banco Metropolitano are no longer accepted in many shops. At a store on 26th and Zapata, his card was declined because only dollars were accepted. His attempts at a nearby store met the same response: "You must pay with dollars."
Wages Can't Keep Up with Dollarization
The devaluation of the peso exacerbates the financial strain on Cubans. Currently, in the informal market, a dollar trades at 390 CUP, a euro at 435 CUP, and the MLC at 220 CUP. With an average monthly salary of 4,000 CUP, a worker can barely purchase ten dollars—a paltry amount considering the costs of dollar-valued goods.
As of May, at least 85 stores across Cuba operate solely in dollars, excluding MLC and CUP transactions. While most are in Havana, this network is expanding throughout the island. In June, the government announced the opening of 50 additional dollar-only stores.
During a broadcast on Mesa Redonda, Vice Minister of Domestic Trade Aracelys Cardoso Hernández acknowledged the near absence of offerings in national currency, attributing it to "production contraction and foreign exchange shortages."
Official Dollarization Since December
In December 2024, the Cuban government officially sanctioned the "partial dollarization" of the economy. The policy, presented by Prime Minister Manuel Marrero Cruz to the National Assembly, allows the use of cash dollars and specific cards in sectors such as retail, airports, clinics, opticians, and state-owned stores.
The plan also enables payments in foreign currency to agricultural producers and manufacturers of exportable goods, aiming—according to the regime—to reduce imports and revitalize the economy. However, the reality is a dual economy where access to basic goods hinges on having dollars. As people face empty shelves and candy as change, this "correction of distortions" seems like yet another step towards excluding those without remittances or access to increasingly elusive U.S. dollars.
Impact of Dollarization on Everyday Life in Cuba
Why is Cuba shifting towards dollarization?
Cuba is moving towards dollarization as its national currency, the Cuban peso, and the Freely Convertible Currency (MLC) lose value, making the U.S. dollar a more stable option for transactions. This shift is also seen as a way to attract foreign currency and stabilize the economy.
How does dollarization affect Cuban citizens?
Dollarization affects Cuban citizens by limiting their ability to purchase goods and services unless they have access to U.S. dollars. This creates a disparity between those who receive remittances in foreign currency and those who do not, exacerbating economic inequality.
What sectors in Cuba are impacted by the official dollarization policy?
The official dollarization policy in Cuba affects sectors like retail, airports, clinics, optical stores, and state-owned stores. It also involves paying agricultural producers and manufacturers of exportable goods in foreign currency to reduce imports and stimulate the economy.