Maravi

Zimbabwe to slash 4 zeros off its currency

Zimbabwe to slash 4 zeros off its currency
By Kingsley Kaswende in Harare
Monday November 26, 2007 [03:00]

ZIMBABWE will slash up to four zeros off the existing currency, Reserve Bank of Zimbabwe (RBZ) governor Dr Gideon Gono has said, warning illegal currency dealers that the currency change will happen quickly. The currency change, which is coming soon is expected to get at illegal cash barons whom Dr Gono accuses of causing artificial cash shortages in the country due to rampant holding of legal tender for speculative activities.

“As monetary authority, we advise that such preparation includes simulations for the removal of one, two, three or even four zeros from the current set of legal tender, as the actual change-over will be done with no advance warning,” he said at a news conference last week.

“In order to guarantee maximum impact in terms of penalties to the destructive forces of parallel markets, the imminent actual date (of the change-over) shall remain undisclosed.”

In August last year, Zimbabwe knocked off three zeros off the Zimbabwe dollar but they were soon back, in a matter of months.

But Dr Gono said this time around the zeros that would be knocked off would not come back.

“Last year we removed three zeros but they quickly came back. This time the governor will remove the zeros and make sure that they don’t come back,” he said.
“Some people may argue that this is not possible in a hyper inflation situation but this time it will be possible.”

Dr Gono said the new notes had already been printed and circulated to the banking system and that the central bank had already assembled countrywide money-fuelling depots.

He said the central bank attempted to introduce the new currency earlier this year and was asked to postpone by the chambers of commerce but that the blossoming cash barons, smugglers and other illicit dealers who were threatening the stability of the national payment systems had forced the change.

“After I announced that we have shelved plans to introduce the new currency the cash barons, with total complicity of some banking institutions and bulk cash handling corporates swung into full gear with their illicit dealings, resulting in the artificial cash shortages that are inconveniencing innocent people,” Dr Gono said.

The country has of late been hit by a critical shortage of cash, causing banks to ration money due to savers.

Dr Gono argued that with a total of Z$58 trillion in cash currently in issue and in circulation, the current shortages were principally a result of underground parallel market trading activities.

He warned holders of excess cash to deposit it back in the formal system in order to avoid serious losses “when their hoarded loot turns into useless manure”.

Labels: GIDEON GONO, ZIMBABWE

posted by MrK @ 10:36 AM