The Los Angeles Times reports on the dual currency system of Cuba.

From the LA Times:

Cuba uses the dominant convertible peso known as the CUC — introduced four years ago to replace the U.S. dollar, which had been circulating for more than a decade — and the Cuban peso known as moneda nacional.

Those with jobs in hotels, airlines and shops and on the thriving black market earn CUCs, referred to as “the dollar” and worth about 25 times the peso. The peso is the currency given to all state workers and pensioners, which must be converted to CUCs to purchase most goods. The Cuban government retains the peso because it lacks sufficient foreign reserves to back and circulate only CUCs.

The U.S. dollar, which circulated in Cuba from the mid-1990s to late 2004, was removed by then-President Fidel Castro and now is subject to a 10% tax whenever it is converted to CUCs — in effect a devaluation by the state. The tax is felt most by tourists and the estimated 10% of Cuban households receiving money from relatives abroad.