Harare- As the nation anticipates the introduction of new notes and coins as per the Reserve Bank of Zimbabwe’s announcement, a lot of questions have risen from the public as they try to understand the implication of these new forms of the Zimbabwean dollar.
Zimbabwe has been going through a period of high inflation and cash shortages which failed to improve even following the introduction of the mono currency system in June 2019.
This has been causing an outcry among citizens, and on the other hand creating avenues for money making for others trading foreign currency at exorbitant rates and charging high premiums for cash out services.
In order to solve this problem, the Central Bank announced on the 29th of October that it was going to inject new $2 bond coins as well as $2 and $5 notes into the market in a bid to ease cash shortages and will amount to 10% of total money supply which presently stands at $19 billion.
Currently cash supply stands at about only 4% of the total money supply which is way below the regional average of between 10-15%.
This was followed by other announcements such as that the amount of money being introduced will amount to $2 billion and the most recent being that the $2 bond coins will be introduced on the 11th of November 2019.
All these announcements have been received with mixed feelings with people questioning why the government is introducing the new money in small denominations in the face high inflation and when the existing bond notes have already lost value.
Eddie Cross, an economist and a member of the Reserve Bank of Zimbabwe’s Monetary Policy Committee on Monday responded to this question in an interview with Star FM’s Linda Muriro.
According to Mr Cross, the new money has a lack of high-end security features, which makes it easier for production of counterfeit notes hence increasing the risk of people losing their money and also resulting in the increase of the amount of money in circulation, which the Bank is closely monitoring.
He also said it will take Zimbabwe more than a few months to afford high denominations with high end security features that could allow them to be less vulnerable.
Cross said that introduction of the $2 bond coins is a move to again combat production of counterfeits as these are difficult to reproduce.
Introduction of smaller denominations will thus result in people continuing to use RTGS for larger transactions and the cash will only be used for change and other smaller transactions as Finance and Economic Development Minister Mthuli Ncube stated.
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