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Zimbabwe's central bank said on Saturday it will circulate $10 million worth of new bond notes on Monday, a quasi-currency that authorities expect to ease a serious cash crunch, but will limit withdrawals to curb any abuses.
The Reserve Bank of Zimbabwe (RBZ) first announced the plan in May to issue bond notes to address chronic cash shortages and supplement dwindling U.S. dollars that have been in circulation for the past seven years.
But many Zimbabweans are sceptical about the scheme after a 2008 multi-billion percent inflationary meltdown caused by rampant money-printing. The new plan has already caused a run on the banks as Zimbabweans empty their accounts of hard currency.
The bond notes will be officially interchangeable 1:1 with the U.S. dollar.
Source: Reuters
See also: India grapples with the effects of withdrawing 86% of cash in circulation
(Score: 0) by Anonymous Coward on Monday November 28 2016, @09:14PM
With a legally binding rate, you might as well just use actual dollars (or pounds or what ever). It will travel better. But that's the point of many of these pegged currency: precisely to make sure they DON'T travel.
Even assuming they are trying to be legitimate, there are reasons to use an independent currency pegged to a dollar:
1) Currency wear out. You'll need a new source if they are in actual circulation, and it is easier to print your own than to always need to go back to the US, especially unofficially.
2) This opens the possibility of an easier transition to a floating currency in the future. (This can be a feature or an anti-feature, depending on how much you trust the government.)
3) National independence/pride. It's pretty shameful to have a pegged currency, but it's even more shameful to be a mere "colony" of another country.
4) It's less likely to provoke some kind of negative reaction from the US government about their currency being co-opted.
5) I imagine it also lets more flexibility in terms of banking institutions as well (such as electronic funds and transferring amounts), although I'm not sure about this.
(Score: 2) by kazzie on Tuesday November 29 2016, @06:14AM
1) Currency wear out. You'll need a new source if they are in actual circulation, and it is easier to print your own than to always need to go back to the US, especially unofficially.
2) This opens the possibility of an easier transition to a
This. The same US dollars havr been circulating in Zimbabwe for so long (since 2009) that many of them are falling apart. Zimbabwe's government can't print new US Dollars, but can reintroduce their own notes.