Cuba's New Dollar Frontier Reshapes Nation's Economic Realities
A single supermarket in Havana, which has been open since December and accepting only US dollars in cash or specific international cards, has ignited debate across Cuba. Its shelves are stocked, and its music is loud, yet it symbolizes deeper economic and social rifts.
A Supermarket for Greenbacks
When customers enter Havana’s newest supermarket—conveniently located beside a five-star hotel—they encounter an unusual scene: blazing lights, cheerful music, and fully stocked shelves. The line of carts is often long, and each shopper’s haul can range from a holiday panettone to a frozen bag of cauliflower. Yet the biggest surprise arrives at the checkout: only US dollars in cash or specific international credit cards are accepted here. Anyone hoping to pay with euros or Visa cards tied to domestic banks, or even the island’s MLC (Moneda Libremente Convertible) cards, must look elsewhere.
The day starts with Celia Cruz’s unforgettable “La vida es un carnaval” as it thunders from the speakers plus fills the air with good vibes. But the actual festive show takes place right at the cash register. In the absence of small US coins for change, cashiers hand out candy to compensate for the difference—an improvised solution to a simple logistical problem and a revealing vignette of how drastically Cuba’s economy is changing.
This store only opened in December, yet it has already become a lightning rod of controversy among habaneros. Crowds flock to see the near-mythical aisles stocked with goods typically scarce in other Cuban outlets. Their experiences run the gamut: some celebrate finding everything they need in one place; others complain about the exclusivity of the currency policy, which leaves them feeling sidelined if they lack physical dollar bills. Linda Levy, a resident of Cárdenas who traveled two hours to check out the store she had seen all over social media, put it bluntly in an interview with EFE: “You can’t pay with Visa, can’t pay with euros. Only with dollars. It’s an American store. It’s about money—and the average Cuban doesn’t have that.”
Yet this supermarket is just one piece of a broader trend. In recent months, the Cuban government has accelerated efforts to capture more foreign currency to shore up a fragile economy. From gas stations that now accept only dollars to private enterprises authorized to import goods in exchange for hard currency, the country shows unmistakable signs of “dollarization”—a process by which the US dollar becomes either the de facto or official currency for business transactions. The monetary strategy sparks social conflict in a country where US dollars were once banned, plus it remains hard to obtain today. It also angers independent economists who view this approach as a temporary solution for more severe economic problems.
A History of Dollar Conflicts
Cuba has long had a contentious relationship with the US dollar. After the Cuban Revolution, ties between the two nations soured, and the dollar became emblematic of an enemy economy. Beginning in the early 1960s, it was unlawful for Cubans to hold or transact in the currency. Yet the collapse of the Soviet Union in the 1990s forced a sudden pivot: to survive, Cuba decriminalized possession of dollars. This decision allowed for a surge of remittances from relatives abroad, softening the blow of lost Soviet subsidies. It gave rise to a parallel economy where those with dollar access could buy goods in “dollar stores” that offered better variety than local pesos could command.
However, Cuba soon introduced the convertible peso (CUC), pegged one-to-one with the US dollar, aiming to reduce direct reliance on foreign bills. For years, the CUC circulated alongside the Cuban peso (CUP), creating a dual currency scenario that confused visitors and citizens alike. Then, in 2020, came the so-called MLC (Moneda Libremente Convertible). This virtual currency, denominated in Cuban bank accounts, was again pegged to the dollar—but it mainly existed in electronic form, linked to bank cards that people could top up with foreign deposits.
Now, the pendulum has swung back. By allowing brick-and-mortar transactions in physical US bills, the government conceded that capturing dollars is imperative to prop up import-dependent sectors, from energy to food. The official rationale is that once the flow of foreign currency stabilizes, the economy can be “desdolarizada” again—meaning the dollar could, in theory, recede to a less central role. Yet critics are skeptical: once a market taste for greenbacks is established, it can be difficult to revert to national currencies, especially when the national peso wobbles under inflation and inconsistent monetary policy.
“The problem is that once you open Pandora’s box of dollarization,” warns economist Pavel Vidal in an interview with EFE, “the majority of markets and economic sectors will want to latch onto it because it’s likely to become the most dynamic part of the economy, more stable and more internationally connected.” That dynamic spells trouble for illusions that temporary acceptance of dollar cash will vanish when conditions improve. Instead, once established, dollar transactions often remain deeply embedded, especially if other currencies fail to inspire consumer and investor confidence.
Social Tensions and Public Grievances
The government thinks dollarization represents a practical solution, but Cuban citizens remain split on this matter. Dollar-only shops now showcase abundant consumer items plus various products, yet many people without access to US currency can’t buy them. Many of the population cannot participate in this new retail system. That disparity is not just theoretical: it manifests as real socio-economic friction that deepens pre-existing inequalities. Long queues, frustration over currency restrictions, and a sense of marginalization all feed public debate.
Cuba’s formal wage structure typically involves Cuban pesos, not dollars. Many state employees earn monthly salaries that convert to mere dollars if measured at the (often fluctuating) exchange rates. Meanwhile, some families receive remittances in greenbacks from relatives in the United States or Europe. Your immediate access to dollars can hinge on your ties abroad. A vast income gap exists between citizens with access to foreign money and those who earn only local pesos.
A new Havana supermarket shows these social splits: Linda Levy expresses her dismay after a long bus ride because she lacks the needed dollars to buy items. Even if she has MLC, it’s not accepted at the dollar-only checkout. This scenario would have been unimaginable just a few years ago, when MLC was pitched as a universal fix, pegged to the dollar, yet seemingly overshadowed by the need for actual cash. For many Cubans, the problem is more significant than a single store; it’s a sign that the government, searching for quick ways to draw in foreign currency, has overshadowed the daily realities of the population.
The discontent has spread to official Cuban media outlets, which usually follow the government’s position. State media has published some unexpected critical articles about the new supermarket plus asked questions about its fairness. They criticized the lack of a formal announcement at opening time. The state media’s public criticism reveals that officials understand how silence about citizen anger could spark more protests in a country lacking essential items and facing severe financial troubles.
A bigger challenge exists: The government needs to import vital items because 80 % of Cuba’s food comes from abroad, draining hard currency reserves. The expansion of dollar-based sectors—tourism, specialized stores, private business import permissions—is meant to funnel greenbacks into state coffers so they can purchase essential items on world markets. Yet, from the street-level perspective, the more immediate effect is the rise of dollar-only zones where local pesos have no purchasing power.
Repeating Old Solutions in a New World
The Cuban government insists that this wave of dollarization is a temporary fix, a stepping stone toward an eventual economic overhaul that will reduce dependence on foreign currencies. Past attempts to walk back from dollar usage show a pattern: in the early 2000s, CUC stores replaced direct dollar commerce, only for the MLC to appear later, and now for the reintroduction of straight dollar transactions. Each iteration claims it is a short-term measure, but each reveals structural weaknesses in the Cuban financial system.
Economist and public policy expert Tamarys Bahamonde sees echoes of the 1990s in this new wave yet believes today’s Cuba is a vastly different landscape. “They’re following the same manual from the ’90s, in a completely different context, in a completely different world,” she tells EFE. “You can’t expect the same outcomes because the Cuba of the 1990s is not the Cuba of the 2020s.”
The economic landscape has shifted. The economy exists more interconnected, plus remittances now flow through digital methods. The US embargo stays in place but has experienced various changes that sometimes restrict and occasionally facilitate specific deals. A growing number of private businesses on the island have just started to build genuine partnerships with foreign associates. Some entrepreneurs can import goods more readily, paying in dollars through newly permitted channels. As a result, a parallel market thrives on social media, messaging apps, and informal networks, dealing in foreign exchange, consumer goods, and even raw materials.
According to official estimates, around USD 2 billion circulates in the informal market in Cuba—a substantial sum that slips beyond the direct control of state mechanisms. This figure includes tourism expenditures, remittances, and side deals. The government hopes that allowing more official channels for dollar spending can lure part of that capital into the formal economy. The risk exists for many Cubans without dollars to feel alienated in society, which raises frustration.
A mix of serious problems drives the shift toward dollars. Cuba faces an ongoing crisis that has lasted more than four years, severe shortages of necessities, and high inflation that constantly makes the CUP lose value against the dollar. Street rates show significant differences from official ones, which creates much confusion. A hefty budget deficit restricts how much help or social support the government provides.
The tough situation makes officials act fast to get quick relief. But as Bahamonde points out, these short-term fixes just mask problems if they don’t address the real issues: low production, too much state control, and multiple exchange rates. A few experts suggest that a planned peso devaluation and major market reforms could bring better results over time. However, such steps come with political risk, as they could upend longstanding ideological commitments and disrupt the power balance in state-run industries.
Ambitions to “Desdolarizar”
An official line repeated by Cuban authorities is that once sufficient currency reserves are recaptured and the economy stabilizes, the island will “dedolarize.” The vision promises a future when local money takes back its primary purpose, plus foreign exchanges step back to serve only specific trades. Many people find this pledge familiar since previous tries to switch back failed when the state needed hard currency again.
The cyclical nature of Cuba’s dollar policies might reflect more profound contradictions in its financial system. The convertible peso (CUC) was introduced to keep the dollar at arm’s length, yet it was eventually phased out. The MLC was similarly introduced to spare the need for physical US currency, yet the government has reopened official channels for handling greenbacks. Each transition sows confusion among Cubans who remember that holding dollars was once a crime, punishable by prison.
Meanwhile, for Linda Levy and other everyday shoppers, the labyrinth of changing currency rules translates into daily difficulties. One must keep track of which store accepts which form of payment, how to convert any leftover currencies, and whether or not an alternate store might have a better selection. The brand-new supermarket in Havana may look bright and promising, but for customers traveling hours to get there—only to find themselves turned away for want of the correct type of bill—it hardly feels like progress.
Pavel Vidal’s notion of Pandora’s box resonates here. As more sectors embrace direct dollar usage—from tourism and retail to private import schemes—business owners and citizens alike may find using a currency that enjoys stable international valuation more convenient. After all, if a Cuban businessperson chooses where to invest, a system grounded in an internationally recognized currency holds clear advantages over a local currency prone to inflation and unhelpful exchange rates. That logic might prove unstoppable, overshadowing any official policy talk of “desdolarizar” in the future.
Searching for a Path Forward
Despite economic instability plus rising social gaps, Cuban authorities continue to present dollarization as a deliberate strategy rather than surrender. The success of the government’s efforts to merge different currencies or restore real value to the peso is still uncertain. Without significant structural changes—such as fostering private enterprise, reforming state-run sectors, and cultivating foreign investment transparently—the reliance on dollars could deepen rather than lessen.
A pivotal question is how the broader populace reacts if the short-term benefits of dollarization fail to translate into tangible improvements in supply or services. Citizen anger might grow as prices keep rising, plus wages remain low. The risk of public opposition limits the scope of major economic reforms. The Cuban leaders need to balance social unrest with their urgent need to attract foreign money for essential imports.
Yet the newly opened supermarket in Havana offers a microcosm of this entire debate: a shiny facade that draws a curious crowd, a sense of novelty and possibility, and an undercurrent of tension about who benefits from these changes. Some local media outlets have run investigative pieces examining why the store opened without an official announcement and how exactly it obtains its imported goods. Others wonder whether it foreshadows a wave of similar dollar-only stores across the island.
Meanwhile, Linda Levy’s complaints echo countless households: “It’s an American store. Here it’s money-money, and the Cuban doesn’t have that.” Her words capture the heart of the matter. Dollarization may be a strategy to bring in foreign exchange, but it simultaneously alienates the many Cubans with no direct line to greenbacks. In Cuba, where people still remember when dollars were forbidden, it seems strange to now pay for necessities in US currency.
The future success of dollarization depends on how Cuba deals with its deep-rooted financial problems – whether it remains just a temporary fix or becomes permanent. If, as official rhetoric claims, the ultimate goal is to phase out dollar usage once stability is achieved, the government must demonstrate consistent progress on exchange rate unification, controlling inflation, and boosting domestic production. Otherwise, the market’s appetite for a stable and internationally accepted currency may overpower any inclination to revert, and the promise of “desdolarización” may become yet another chapter in the island’s long history of currency experimentation.
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Currently, the supermarket is the poster child of Cuba’s new dollar frontier. In this place, candy is handed out as change for lack of US coins, where Celia Cruz belts out an iconic salsa anthem, and where purchasing even everyday groceries demands the world’s most ubiquitous currency. It is a vivid reminder that behind the macroeconomic arguments lies the day-to-day reality of Cubans wrestling with frustration, curiosity, and cautious hope that this latest policy shift might, at least in some small way, ease the hardships of island life rather than intensify them.
