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Cuba's banks and exchange houses began large-scale conversions of U.S. money into a local currency
Cuba's banks and exchange houses began large-scale conversions of U.S. money into a local currency on Thursday as Fidel Castro's communist nation moved to dump the dollar from general circulation. Cubans lined up several hours before exchange houses opened to convert the American dollars widely used here for 11 years for the local Cuban convertible pesos that will now be the main currency accepted for consumer goods. Responding to stepped-up U.S. sanctions, Castro announced Monday that within two weeks, U.S. currency would be not be accepted at stores and businesses. After Nov. 8, changing American money will carry a 10 percent commission fee that won't be applied to other foreign currencies, informs the Associated Press. According to ABC 7 News, moving to wean its communist economic system from the U.S. currency, Cuba said that dollars will no longer be accepted at island businesses and stores in a dramatic change in how commercial transactions have been done here in more than a decade. The resolution announced Monday by Cuba's Central Bank seemed aimed at finding new sources for foreign reserves and regain more control over its own economy as the U.S. government steps up efforts to prevent dollars from reaching the island as part of a strategy to undermine Fidel Castro's government. Cuba's national currency, the peso, cannot be used with international partners. "Beginning on November 8, the convertible peso will begin to circulate in substitution of the dollar throughout the national territory," Castro said in a written message read by his chief aide Carlos Valenciaga. Convertible pesos were originally introduced in December 1994 and could be used interchangeably with U.S. dollars up until now in establishments operating in hard currency. The Cuban peso is not convertible on the world market and can therefore not be used in hard currency shops and other businesses. Convertible pesos can be purchased by both Cubans and foreigners in banks and currency exchange houses, although there will now be a 10 percent tax charged for this transaction when payment is made in U.S. dollars. This is not a change in the exchange rate between the dollar and the convertible peso, which continues to be one to one, but simply a tax on the purchase of convertible pesos with U.S. dollars," explained Cuban President Fidel Castro. Castro appeared on Cuban national television just five days after a stumble and fall that left him with a fractured knee and arm. The new measure was adopted as a response to actions recently taken by the U.S. government of George W. Bush aimed at further obstructing Cuba's access to U.S. currency and its ability to use the dollars acquired through the tourism industry and money transfers sent to Cubans from relatives living abroad. The economic sanctions adopted by the United States against Cuba over 40 years ago prohibit the small Caribbean island from using the U.S. dollar in international commercial transactions. Earlier this month, Daniel W. Fisk, the U.S. deputy assistant secretary of state for Western hemisphere affairs, announced the creation of the Cuban Asset Targeting Group to identify and obstruct the movement of hard currency in and out of the island. The message from Castro, read by his top aide, Carlos Valenciaga, while the president looked on, stressed that the new tax is not being applied as a means of collecting hard currency for the state coffers, but rather to protect the country from the impact of U.S. aggression. It will serve as compensation for the costs and risks to the national economy caused by the use of U.S. dollars," according to the Central Bank resolution, dated October 23. It was emphasised that this tax will only be charged when U.S. dollars are used to buy convertible pesos, and will not apply to any other currency, reports the Economy.
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