THE Reserve Bank of Zimbabwe (RBZ) unveiled special coins on Friday to ease a shortage of low denomination cash, which has forced shoppers to accept sweets or pens in lieu of change.
Circulation of the coins would however be limited to Zimbabwe.
“The bond coins are going to be issued in denominations of one cent, five cents, ten cents, 25 cents and 50 cents,” Reserve Bank Governor John Mangudya said at a news conference in Harare.
He said the coins would be equal in value to US cents, “trading one for one”.
“The bond coins derive their name from the US$50 million bond coin facility that the Reserve Bank arranged for the purpose of providing the coins with intrinsic value,” said the RBZ chief.
“The bond coins would therefore be a good store of value. Consumers and businesses would be able to exchange the coins for paper money at their banks.
“The initial amount to be made available is US$10 million worth of bond coins to be released into the market between December and March 2015.
“This translates to just below 2% of total bank deposits. Under normal circumstances, the proportion of coins to money in circulation in an economy is between 20 to 25%.
“However due to the fact that Zimbabwe is using multiple currencies, we envisage the bond coins to remain below 10% of total bank deposits.”
Zimbabwe switched to a multi-currency system in 2009 after hyperinflation rendered the local dollar worthless.
The country now uses the US dollar, British pound, South African rand, Botswana pula, Japanese yen, Chinese yuan, Indian rupee and the euro, among other currencies.
Eighty percent of the transactions in the economy are made using the US dollar, according to the central bank.
Adoption of multiple currencies helped Zimbabwe stem hyperinflation — which struck 231 million percent in 2008, before the government stopped counting.
Mangudya said the introduction of the coins would lower prices, as most businesses had rounded up to the next dollar during the change shortage.
“Our expectation is that the introduction of bond coins would necessitate correct pricing for goods and services which hitherto was constrained by the absence of an appropriate system of coins.
“These coins shall therefore go a long way in mitigating the country’s lopsided pricing structure for the convenience of consumers.
“You know that in the shops you were getting sweets, you were getting pens as change and that we cannot have. We want to bring decency in Zimbabwe.”
The RBZ chief said the special coins would be introduced on December 18 and could be exchanged for US dollars, but they could only be used in the Zimbabwe.
He said the country could not import US coins to solve the shortage due to exorbitant costs, but refuted speculation the new coins were a way of introducing the discarded Zimbabwean dollar.
“We can never be so careless to bring back the local currency,” he said. “We have no appetite to do so, and we can’t be careless to do so and we won’t do that.”
Zimbabwe’s economy has been on a downturn for over a decade, characterised by high unemployment.
A liquidity crunch has forced companies to shut down, downsize or migrate to neighbouring countries, while an indigenisation law which forced foreign companies to cede majority shares to locals scared off foreign investors.AFP