[Marxism] Cubans rush for Chavitos as US$ becomes illegal tender

["Walter Lippmann" <walterlx@xxxxxxxxxxxxx>]

(The idea that the Chavito is named for the leader of
the Bolivarian revolution is amusing, but I don't at
all believe it. Still, it's fun to read this...<g>

(Over the last couple of days it's become very easy to
change the last of our dollars over to convertibles in
Cuba. This suggests there won't be another extention of 
the time to change over. 10% tax starts in four days.)
=======================================================

Published: Wednesday, November 10, 2004

Bylined to: David Coleman

Bush snubbed as Cubans rush for Chavitos as US$ becomes
illegal tender

http://www.vheadline.com/printer_news.asp?id=23434

Reports from Havana (Cuba) say that the Caribbean island's
new convertible currency is being dubbed the "Chavito? in
honor of Venezuela's President Hugo Chavez Frias.

Officially it is known as the 'Cuban Convertible Peso' or
CUC but ?chavitos? have become effective as legal tender
throughout Cuba from Monday replacing the US$ which had
been unofficially allowed to function as a parallel
currency since 1993.

In the move, which is seen as a direct snub to George W.
Bush's failing unilateral attempts to isolate Cuba, the
Cuban Central Bank says that it is underlining Cuban
sovereignty and gaining control over circulation of its
national money and liquidity.

Central Bank vice president Rene Lazo says that the US
dollar was hampering assessment and regulation of liquidity
... "the bank can now play a greater role in maintaining an
appropriate balance between currency in circulation and the
supply of goods and services, an essential ingredient to
ensure that the Cuban currency holds its value."

The new Cuban Convertible Peso or Chavitos is equivalent in
value to one US$ (the regular Cuban peso is currently worth
26 to the US$) ... "from the point of view of the country's
sovereignty, this step has far-reaching implications," says
Lazo, "it is one of the Revolution's most complex financial
transactions."

In 1993 Havana accepted the private possession and
circulation of US dollars next to the Cuban peso, which is
currently worth 26 to the dollar at official exchange
houses.

The Chavito is now the only money accepted in commercial
establishments in Cuba that operate with foreign currencies
including special stores, hotels, restaurants and taxis
although a 10% tax on US$/CUC exchange transactions will
now take effect on November 14 and there is already strong
demand for the new currency before the tax -- which only
applies to USA currency -- takes full effect on November
15. It also applies to cash transfers from USA-based Cubans
who will have to send funds in other currencies -- Euros,
Canadian $, UK£ etc -- or punge out the 10% surcharge.

Unofficial estimates are that exile Cubans remit between
US$800 million and $1 billion a year while Cuba's thriving
tourism industry brings in about $2 billion a year

Cuban exchange houses will now only accept Euros, Swiss
francs, UK£ and Canadian $ which are exempt from the 10%
fee while the Central Bank estimates that more than 700,000
Cubans have opened new Chavito accounts or exchanged their
hot US$ for Cuban pesos with less than a week to go before
the US$ becomes illegal tender.



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