Zimbabwe will introduce a new currency in November 2019
Zimbabwe will introduce a new currency in November 2019.
10 years after the abolition, in November 2019, the Central Bank of Zimbabwe plans to reintroduce its currency Zimdollar ( ZWL).
In 2009, after several cycles of devastating hyperinflation, Zimbabwe was forced to abandon its currency - the Zimbabwe dollar. It was replaced with a multicurrency basket consisting of: US dollar, British pound, South African rand, Botswana pool, Japanese yen and Chinese yuan. The dominant currency was the US dollar. In 2015, banknotes in foreign currency in banks disappeared, which led to a cash shortage in the economy. In order to fill the deficit in cash, in 2016 the central bank of Zimbabwe was forced to introduce Zimbabwean bond notes and bond coins as a surrogate currency. Initially, they had equal value with the US dollar, but gradually began to become cheaper and today in American currency they are trading at level 1:15.
To help Zimbabweans cope with a cash shortage mobile money has been used. In this area, Zimbabwe is dominated by Econet's subsidiary, EcoCash. Lack of cash spurred an increase in fees for the use of digital money. As a result, their use has also become problematic, as wallet owners must pay a fee of up to 50% to access their cash. This led to instability in exchange rates.
The currency crisis continued to worsen even after the late President of Zimbabwe, Robert Mugabe, succeeded Emmerson Mnangagwa at the end of 2017.
In 2018, the new President of Zimbabwe, E. Mnangagwa, appointed the new Minister of Finance, Mthuli Ncube, who, together with the manager of the reserve bank of Zimbabwe, John Mangudya, began to pursue a monetary policy unfolded around currency reforms. The essence of these reforms is the crowding out of foreign currencies and the resumption of the national currency.
Obviously, due to commissions charged by agents, the Zimbabwean authorities banned mobile money operators from depositing and withdrawing funds. These functions were restored only after restrictions were established in the amount of about ZWL100 per transaction. On the parallel market, the ZWL100 is $ 5, and on the official interbank market, the ZWL100 is about $ 6.60.
In addition, to combat speculation, the country's leadership decided to freeze the accounts of companies that provoked the problem of access to cash due to excessive commissions and instability of exchange rates. Also, in an attempt to stabilize the currency problem, one of the reasons was the decision of the Central Bank of Zimbabwe to introduce a new currency Zimdollar.
The official national currency of Zimbabwe, the Zimdollar or the Zollar, was introduced on February 21, 2019, first as RTGS dollars (Real Time Gross Settlement). The currency consists of bonds in coins and banknotes and gross settlement balances in real time. In June 2019, the Zimbabwe dollar was introduced in electronic form, replacing the multicurrency system, which meant a ban on the use of foreign currency as a unit of settlement.
According to the monetary policy committee of the central bank of Zimbabwe, the cash level in the economy is inadequate to meet transaction demand, therefore it is necessary to increase the availability of cash in the domestic market specifically for transactional purposes by gradually increasing the money supply over the next six months.
Therefore, in November 2019, the Zimbabwe government will add cash to circulation by issuing a new currency in the form of coins worth 2 zimdollars and banknotes of 2 and 5 zimdollars. They will still be legal tender along with bonds issued in 2016, the effect of which will gradually cease.
There are concerns that the introduction of new funds in Zimbabwe could trigger a new increase in inflation. In reality, this will depend on what policies the new leadership of the country will adhere to, whether manufacturing will develop and new jobs will be created. It will be extremely difficult to prevent inflation. In addition to price distortions and commissions for access to cash for consumers, Zimbabwe has seen a sharp increase in prices, the most recent of which were fuel prices by 12% after the removal of subsidies on petroleum products this year, as well as tariffs for telecommunications services.
http://www.xinhuanet.com/english/2019-10/03/c_138446290.htm
https://qz.com/africa/1739416/zimbabwe-brings-back-zim-dollar-and-the-li...
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