Zimbabwe Introduces New Currency, Ending Dollarization

ZIM CASH

After years of using the US dollar and the South African rand as the country’s main medium of exchange, Zimbabwe has finally released its own currency. The Southern African country suffered years of economic downtrend  caused mainly by sanctions imposed by major Western nations. However, on Tuesday, Nov. 12, reports say Zimbabweans queued up outside banks, eager to lay hands on the ‘virgin’ banknotes; the country’s first local currency to be issued since 2009.

For a decade, the Zimbabwean dollar depreciated  to the point where it was all but abandoned by the government who authorized citizens to trade in foreign currencies.

In the mid-2000s, the Zimbabwe government, as a result of the heavy economic sanctions, Zimbabwe found itself battling inflation. By November 2008, the month on month inflation rate had shot up to to 79,60,00,00,000 (79 billion) percent. By January of the following year, the government decided to start a process of  handing out licenses to traders, shop owners and other stakeholders authorizing them to trade goods and services in foreign currencies. The US dollar and neighboring South Africa’s rand became the main media of exchange but over time, the list of currencies circulating on the market grew to nearly a dozen.

During this period, hyperinflation was so high that Zimbabweans would for instance pay 50 billion Zimbabwean dollars for an egg and 100 trillion dollars for a weekly bus ticket, according to BBC.

Zim Cash 3
Photo Courtesy :WSJ

The new currency was supposed to be available on Monday, Nov. 11, but the introduction was delayed. The Central Bank eventually made the much-anticipated new local banknotes and coins available through local banks and ATMs but already citizens are raising issues.

Some are complaining about a ZWL300 ($20) daily limit; a frustration fueled by a recent viral photo of a so-called ‘cash baron’ showing off new bank notes from the Reserve Bank.

In an effort to rescue the currency from a stillbirth however, the Governor of The Reserve Bank of Zimbabwe John Mangudya has pledged to look into the matter and bring the errant banks who he blames for the channelling money to the black market.

“We have launched an investigation and banks that will be found guilty will be heavily penalized.Our task has been made easier because some notes we are seeing on social media have serial numbers, I think you are aware that banks collected their allocations on Monday morning so we know which bank got notes with which serial numbers. Each bank was allocated notes with certain serial numbers so the investigation is half done already,”

 

 

 

The Zimbabwe central bank is trying to avert fears that the release of the new currency will worsen the inflation, which currently stands at an estimated 300 percent, according to the International Monetary Fund.

 

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