Harare – The Reserve Bank of Zimbabwe (RBZ) on Monday said all banks by mid-October should create nostro accounts for foreign currency transactions “nostro FCAs) which will run separately from the current bank accounts now limited to real time gross settlements and bond notes only.

In a monetary policy statement presentation in the capital, RBZ governor Dr John Mangudya said the measure was meant to preserve value for foreign currency and boost market confidence.

This pronouncement according to economic analysts is a clear indication that Mangudya has finally accepted that the bond notes and the US Dollar are not at par.

In February 2018, RBZ introduced a policy that requires banks to ring-fence foreign currency for foreign exchange earners that include international organizations, diaspora remittances, free funds, export retention proceeds and loan proceeds.

Dr Mangudya said numerous enquiries received by the Bank point to the fact that this policy has not been implemented by some banks on a transparent basis that promotes confidence within the economy.

“With immediate effect, all banks are therefore directed to effectively operationalise the ring-fencing policy on Nostro foreign currency accounts by separating foreign currency accounts (FCAs) into two categories, namely Nostro FCAs and RTGS FCAs.

“Accordingly all banks are directed to use their know-your-client (KYC) principles to comply with this directive to separate the accounts without requiring their clients to complete any other documentation other than for new bank accounts.”

Banks have been provided with a period of up to 15 October 2018 to fully comply with this policy measure.

Banks are also expected to provide reasonable deposit rates on the Nostro FCAs in line with international best practice on such accounts.

He said this policy measure is expected to encourage exports, diaspora remittances, banking of foreign currency into the Nostro FCAs and to eliminate the commingling or dilution effect of RTGS balances on Nostro foreign currency accounts.

“The relationship between the two categories of the FCAs shall continue to be at parity. This is essential in order to preserve value for money for the banking public and investors during the transition to a more market based foreign currency allocation system that shall be implemented once the economic fundamentals are appropriate to do so.

“As a further support to this measure and to provide credit enhancement or deposit protection for the Nostro FCAs, the Reserve Bank is finalising discussions with the African Export-Import Bank (Afreximbank) towards a US$500 million Nostro Stabilisation Guarantee Facility (NSGF) to provide Nostro FCA holders with assurance that foreign currency shall be available when required by the account holders.”

The NSGF which will be similar to the AFTRADES Facility that guarantees interbank trading in Zimbabwe is targeted to be in place by the end of October 2018.

Additionally, Dr Mangudya said foreign currency in the Nostro FCAs pertains to free funds, diaspora remittances, international organisations’ remittances, portfolio investment inflows, loan proceeds and export retention proceeds.

He said it is essential to note that all exporters retain 100 percent of their export proceeds with the exception of gold producers that retain 30 percent of export proceeds; platinum, diamonds and chrome 35 percent and; 20 percent for tobacco and cotton producers.

The Bank has finalised putting in place facilities in an amount of $500 million to cater for importation of strategic requirements that include fuel, electricity, cooking oil, wheat, and packaging among other.

The central bank’s chief said facilities are from Gemcorp $250 million, Afreximbank US$150 million and Afrigrain US$100 million.

“These facilities are over and above the $100 million from CDC/Standard Chartered Bank, $100 million from Ecobank, $30 million from IDC of South Africa to Agribank and $25 million from the African Development Bank (AfDB) to CABS Building Society.”

The separation of FCA accounts is expected to attract US dollar deposits in the economy, meaning those individuals who had been stashing money in their homes due to lack of confidence in local banks will now deposit it in their bank accounts knowing they will get it whenever they want it.

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