RBZ disburses $4m for demonetisation

HARARE - The central bank has disbursed about $4 million towards paying depositors money which was wiped out when the country adopted the multi-currency system shunning the embattled local currency, the Zimbabwean dollar (Z$), the Reserve Bank of Zimbabwe (RBZ) governor said.

Central bank governor John Mangudya said the demonetisation of the Z$, which started in June following the promulgation of Statutory Instrument 70 of 2015 — was running smoothly despite initial resistance from the public.

“Of the $20 million that had been initially put aside for the exercise, $4 million has been paid out so far,” Mangudya said.

He also said efforts were being made by the apex bank to deal with customers of closed banks with the central bank liaising with the Deposit Protection Corporation for the compensation of these depositors.

Demonetisation is the act or process of removing the legal status of a currency unit.

In 2009, Zimbabwe ditched the Z$, and government adopted the multi-currency system — a basket of currencies dominated by the United States dollar and South African rand.

According to Mangudya, the demonetisation was necessary in order to buttress government’s commitment to the multiple currency system and restore confidence in the economy.

However, the governor is on record giving assurance that the country at the moment lacked the conditions to revert back to the national currency.

“We have not yet met the optimal conditions for us to use our own currency, so once I get all the Zim dollar notes I am going to burn them because I have been allowed to do so” he said then.

Meanwhile, Mangudya said bond coins valued at $9 million had so far been collected for distribution by various banks to date.

According to the governor, the uptake in terms of the figures represented a 90 percent uptake rate.

The central bank last year introduced the new regime of “special coins” which are indexed at par with the United States coins, and fought off criticism that the coins were a reincarnation of the notorious Z$.

The coins are worth $10 million which translate to 0,2 percent of total banking deposits which currently stand at around $5 billion, and would be maintained at below 10 percent and are in denominations of 1c, 5c, 10c and 20c are part of a five-year $50 million bond that government had secured to give them value.

At least 30 million rand worth of coins would also be imported to augment the bond coins. The bond coins’ circulation is limited to Zimbabwe.

“Acceptance of the bond coins has also benefitted from the progressive weakening of the South African rand, as the transacting public prefers to minimise exchange losses by shifting to the use of bond coins.

“Evidently, the introduction of bond coins has resulted in price correction processes that have benefited the transacting public, as small change is now easily available. The bank continues to implore business to further realign their prices for the benefit of the consumers,” he said.

Comments (2)

What is the RBZ position regarding fixed deposits such as Paid Up Permanent Shares (PUPS)?I went to CBZ and they indicated that they are waiting for instructions from CBZ.

Investor - 12 August 2015

Why is it that genuine 2001 and 2oo3 $500. and $1000. notes are not accepted in this exercise? Why the bias towards 2007-2008 notes only?

Aliphelithemba - 12 August 2015

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