A story in CUP
It is time to build, plan and execute. Enough of successful experiments that do not proliferate under the thousand laws that govern them. The launch, the starting point, came on October 15, on the Mesa Redonda TV program, where the Cuban government announced a financial scheme of “electronic dollarization.”
Many economists sensed that this measure would come sooner or later. They consider that a change of direction is now being achieved, towards more financial and less political planning, which could represent the necessary catapult for a reboot of national industry.
Although the scheme is much more complex, and at some point remittances, the USD-CUC informal exchange rate (black market), and the import capacity response to the growing demand must be incorporated into it; for the first time, credible paths to development are opening up.
Meanwhile, those who keep their feet on the ground and are dedicated to more microeconomic actions, ask themselves: What will happen to the CUC? An additional and valid concern. Contemplating a loss in the exchange rate means a whole nation rushing around, once again.
All this confusion has created a space for healthy and constructive dialogue among the self-employed, who are seeing their accounts and commercial operations in Cuban hard currency (CUC) threatened. Because they know that, although inflation is lurking just around the corner, ready to bite the CUP at any moment, this will be the currency chosen to operate from day zero onwards. Added to this is the concern that the exchange rate, currently at 24 CUP to 1 CUC, could go down to 15 or less; causing irreparable losses at any moment.
In Cuba there is no market capable of diversifying risks and establishing a financial balance between different assets. Investing in currencies other than the USD could cause a bigger problem.
Monetary stability is based on decisions that are not in our hands. Presidential elections, coups, weather events, etc. In order to avoid this negatively impacting us, it would be necessary to allocate the same currency for purchases and trips abroad, or purchase investment portfolios in other countries based on gold; but this is much more complicated than it sounds.
The devaluation of the CUC will occur, of that we are sure, but it will be gradual. State companies are currently operating with an illusory rate of 1 x 1, and they will be the most affected. And that is the best aspect of the private sector.
Of course, we have to begin to minimize the accounts receivable in CUC with state clients, protect contracts with clauses that specify the exchange rate of the collection if this is done at the time of the devaluation; and invest CUC in gold, which we know here in Cuba never depreciates.
The cards are already on the table. Any decision made to protect assets has to be the correct one. The important thing here is the country, the rest, well, the rest is a story that I will tell in CUP.