The peso is one of the two official currencies of Cuba. It is often referred to as the national peso or the moneda nacional, hence the symbol abbreviation of $MN. The other official currency of Cuba is the convertible peso, often referred to as the Cuban dollar. The Cuban peso, like most peso-denominated currencies, can be subdivided into 100 centavos. The Cuban peso is considered a non-convertible currency and is used internally for basic necessities and private transactions. The prices of goods purchasable with the national peso are controlled by the state, while the prices of other goods are set by supply and demand. The national peso is valued at a rate of approximately 25 national pesos to 1 convertible peso. All currency in Cuba is issued by the Central Bank of Cuba. The Central Bank of Cuba was established in 1997 to update the duties of and replace the National Bank of Cuba. The President of the Central Bank of Cuba sits as a member of the Cuba’s Council of Ministers.
The first currency used in Cuba was the Spanish real. In 1857, the first Cuban banknotes were issued in pesos. They were valued on par with the Spanish eight-real. Centavos-denominated notes began to be issued 12 years later, effectively decimalizing the Cuban peso. The value of the coinless currency was maintained by a peg to the U.S. dollar from 1881 to 1960, when the U.S. dollar peg was replaced by a peg to the Soviet ruble. The subsequent U.S. embargo of Cuba drove down the value of the Cuban peso, and it was driven down even further after the collapse of the Soviet Union in 1991. In order to achieve some sense of economic stability, the U.S. dollar was made legal tender in Cuba from 1993 to 2004. The U.S. dollar was the basis for the convertible peso, which was introduced on par in 1994.
Cuban workers are paid partially in national pesos and partially in convertible pesos. National pesos are used for basic needs and convertible pesos for luxury items or services. Tourists and foreign businesses use only convertible pesos. The convertible peso has maintained a peg to the U.S. dollar since 2004 at a value of 1 CUC: 1.08 USD. However, in 2011, the CUC was put on par with the U.S. dollar.