Latest: Zim to introduce Bond notes

As cash shortages continue looming the Reserve Bank of Zimbabwe (RBZ) today announced policy measures to address the liquidity crisis, among them being the introduction of  bond notes.The  policy measures are set to deal with the restoration of  fundamental principles of the multi-currency system to ensure that the burden of demand for cash is distributed  among currencies that include the rand, pula among currencies in the country’s  multi-currency basket.

The policy measures follows the widespread shortage of cash in the country as evidenced by queues at some banks and automated teller machines.

Addressing journalists on the measures to deal with cash shortages whilst simultaneously stabilising and stimulating the economy, RBZ governor, Dr John Mangudya said, “The Zimbabwe Bond Coins of denominations of $2, $5, $10 and $20 will be introduced in the future as an extension of the current family of bond coins for ease of portability in view of the size of the USD200 million backed facility,”

Although he could not give a specific date for the introduction of the bond notes, RBZ governor said the facility shall also be used to discount trade related paper in order to provide liquidity for business trading operations.

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The central also set a minimum of $1000 on both cash  and  ATM withdraws.

“Inorder to continue to be compliant with international best practice, with immediate effect, cash withdrawal limit shall be as follows cash withdrawal $1000, ATM withdrawal $1000,” said Dr Mangudya.

Inorder to resolve the cash shortages, RBZ boss said it is essential to go back to the essentials of restoring the fundamental principles of the multi-currency system through increasing the availability and usage of the currencies within the multi-currency basket which was designed to minimize concentration risk of exerting pressure on the currency in an economy

The restoration and promotion of the multi-currency system was also pointed out as a key measure in curbing the cash shortages currently prevailing in the country.

“Complimentary systems are set to be put in place across all sectors of the economy to support policy application and effectiveness. In this regard the highlighting foreign currency management framework shall require the enforcement of multi-currency pricing of goods and services,” said Dr Mangudya.

He said that most products in Zimbabwean shops are from South Africa, hence it is pertinent that shops owners and businesses should think in Rand terms as opposed to abstract USD prices.

In order to restore and prompt the wide spread usage of currencies in the multi-currency basket, RBZ says with effect from 5 May 2016, 40% of all new USD foreign exchange receipts from export of goods and services including gold and tobacco sale proceeds, shall be converted by the RBZ at the official exchange rate to Rands and 10% to Euros.

“This policy measure is designed to ensure that we spread the demand for cash amongst a wide range of currencies and inorder to mitigate against concentration risk.

“This framework shall not apply to diaspora remittances and non-governmental organizations, where such receipts shall continue to be treated as free funds in line with the existing framework,” said Dr Mangudya.

Wholesalers operating without Point of Sale Machines were encouraged to start using the machines to limit the shortage of cash.

“The reserve bank also noted with concern that some wholesalers and retailers are operating without POS machines in their outlets. This scenario exacerbates demand for cash as consumers will be compelled to look for the required amount of cash to transact with them.