Bond Coins Are Vital for Zim – RBZ Boss
The introduction of bond coins was a “confidence-building measure” after the hyper-inflationary and pre-dollarisation era’s “financial trauma”, Reserve Bank of Zimbabwe (RBZ) governor John Mangudya has said.
The Central Bank boss was speaking at an Institute of Chartered Accountants Zimbabwe (Icaz) breakfast meeting yesterday where he stated that a “measure of resistance” to the new initiative was anticipated.
“…it is an issue of trust and confidence. We are introducing the coins as a gradual measure to regain confidence and trust from the market, so yes resistance is very natural and expected, but let us not live in the past,” Mangudya said.
This was after the Harare meeting had quizzed the governor on the policy rationale — a move also in motion in Ecuador and Panama — and with the executives almost expressing doubt or uneasiness on market preparedness.
However, the former CBZ Holdings Limited chief executive said that they expected the negative sentiment or pessimism to taper off or subside with time and as the market warms up to the idea.
Crucially, Mangudya told the accountants to relax as government had “no intention to defraud Zimbabweans of their hard earned cash” through this monetary initiative.
“The problem is that Zimbabwe is a financially-traumatised society. It is as bad as (a violated) individual, but please relax,” he said, adding the operations would be kept at below 5 percent of total money supply.
The new coins, which went into circulation yesterday, are worth $10 million and thus translating to an inconsequential two percent of total banking deposits of approximately $5 billion in circulation.
Mangudya acknowledged “people’s fear about the Zimbabwe dollar’s return and, hence, the need to guard against this”, but fundamentals were not ripe for this.
Crucially, he said the coins would not help fix the country’s liquidity problems, but were simply meant to establish market confidence.
“The fundamentals are not yet right (for the local currency return), but Zimbabweans must be more worried about poor governance issues (such as corruption) than bond coins,” the former bank executive said.
The special coins of 1c, 5c, 10c and 25c are part of a five-year $50 million bond, which government has secured with a foreign lender and are only useful in Zimbabwe.
At least 30 million rand worth of coins would also be imported to augment the programmes.
After ditching the Zimbabwe dollar in favour of foreign currencies in January 2009 after hyper-inflation had reached 500 billion percent, Zimbabweans have generally been sceptical about the government’s financial motives.
But like Ecuador and the Panamanian balboa — countries that have also dollarised — the special coins have the same value as the greenback.
For their daily transactions, Zimbabwean businesses mainly use the American dollar and South African rand, but usually round-off prices and give consumers vouchers or sweets due to a critical lack of coins. – DailyNews
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Bond Coins Are Stronger than South African Rand
It is indeed worrisome that some business people, shop owners and transport operators are not accepting bond coins from their clients citing a number of challenges that they think may affect them when they accept those coins.
It is high time these business people start accepting these bonded coins as they have value which is equivalent to the United State of American dollar. Unlike the South African rand which has a lower value than the USD, people should not be skeptical about these bond coins.
Bond coins are convenient for the public to transact easily, especially on the issue of divisibility of cash. Government’s efforts of introducing these coins is intended to ease change shortage problems that most customers face after purchasing groceries from shops, as well as pricing structures by dealers.
Zimbabwean economy is mainly dominated by the United States dollar, and South African rand for transactions, but businesses usually round-off prices and give consumers vouchers that would not be accepted in other shops or forcing them to accept bubble gums, sweets, pens, matches or trivialities as consolation of their cash because they lack minor denominations such as one cent or five cents.
Introduction of bond coins is a splendid solution to the monetary divisibility challenge which has been bedeviling Zimbabwe since 2009. These bond coins will also assist in the reduction of liquidity crunch.
Furthermore, use of bond coins will assist in restoring of correct pricing models of goods and services. It is of paramount importance that the Reserve Bank of Zimbabwe should continuously educate the public about these bond coins.
In some rural areas people are not even aware of these bond coins and their value. Hence, the Reserve Bank of Zimbabwe should be encouraged to enlighten people across the nation about these coins.
However, business people should play a pivotal role in encouraging customers to accept these bond coins as they are a legal tender. Bond coins are used to buy locally, hence support the local industry as the money will be circulating locally.
Coins have been there since the dawn of time, therefore these bond coins are equivalent to any other lawful currency which is currently in use in this country.
The government should enforce the universal usage of these bond coins. Honestly, bond coins should be considered as a statutory instrument that everyone should feel free to use.
It is through people’s goodwill that these bond coins will buttress the multiple currency system through the provision of change especially for the US dollar notes.
The introduction of bond coins may likely assist in reducing prices of some basic products such as bread. The price of a loaf of bread has been pegged at one US dollar since the introduction of foreign currency.
Most of the shop owners were citing lack of small change as the reason behind that price. However, recent reports from millers have it that the retailers were making obscene profits from that and called for a decline in the price of bread owing to the availability of smaller denominations on the market-place.
It is therefore imperative for every citizen person to accept and utilize bond coins as they are a lawful tender in Zimbabwe.
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