RBZ sued over ‘new’currency

Source: RBZ sued over ‘new’currency | The Herald April 28, 2016

The Reserve Bank has been dragged to the Constitutional Court by an individual who claims that the bank declined the self-proclaimed research scientist’s proposal to introduce standardised gold coins for use as domestic currency. The application is based on the assumption that the central bank denied the applicant their constitutional right to act in public interest by not giving her the licence to introduce gold coins.It also alleges that the bank infringed fundamental right of freedom. The Reserve Bank of Zimbabwe is cited as first respondent while the RBZ governor is listed as second respondent.

“In my opinion I feel that the Reserve Bank of Zimbabwe has failed to discharge its duties in accordance to the Reserve Bank of Zimbabwe Chapter 22:15 Section 6, to achieve and maintain the stability of the Zimbabwe dollar,” said Ms Flattah Mpofu, the applicant in case number 101 /2015.

She alleged it is her constitutional right to “challenge and charge the Reserve Bank of Zimbabwe for incompetence,” as provided for through Section 60(a) of the Constitution of Zimbabwe.”

Ms Mpofu alleges that the RBZ has failed to foster liquidity, solvency, stability and proper functioning of Zimbabwe’s financial system and participate in an international organisation whose objective is to pursue financial and economic stability through international co-operation.

She said that domestic currency, which was scrapped and replaced with a basket of currencies in 2009, was eroded by inflation through rating, which she said is a man made idea.

“The Reserve Bank of Zimbabwe should have come up with an idea, which could stop the type of rating practiced in 2008, which exhausted our currency,” she said.

The adoption of a multi-currency system in 2009, she said, was meant to enable Zimbabweans who have relatives in the Diaspora to use the currencies since the country has no legal or functional domestic currency, “but this idea (of the multi-currency system) is now being construed as gazette legislation.”

The RBZ has, despite having earlier agreed to a roundtable meeting to discuss the issues raised in her court application to avoid costs of prolonged litigation, eventually resolved to file notice of its intention to oppose the application in the court.

Part of the reason cited by the central bank includes the fact that the founding affidavit of the court application does not disclose the cause for action against the central bank.

“The application is therefore fatally defective and it ought to be dismissed on this ground alone,” said RBZ legal counsel.

“The effective relief that the applicant is seeking is not against the respondents.

“Furthermore, the relief seeks to confirm a legal position which is already known and therefore inconsequential as regards obligations of the respondent.

“It has not been explained by the applicant why parties for which relief is being sought against them have been cited in the application,” the RBZ further claims in its opposing affidavit.

The central bank said the applicant alleges in one of her affidavits to the court that she was approaching the court in terms of Sections 64 and 56 of the Constitution of Zimbabwe.

“There is no provision which allows the applicant to approach this court in terms of these sections. The application is therefore not properly before the court and ought to be dismissed on this ground alone,” the RBZ further said.

But Ms Flatter Mpofu alleges that she had inquired from the central bank how she could send to the RBZ the proposal concerning innovation or improvement in terms of money invention.

She further says she was told by an unnamed official at the central bank that there were many letters, which had been sent in by people suggesting how the Zimbabwe dollar could be revived.

Ms Mpofu claims that several of her efforts to have audience with the bank, including a letter to central bank deputy governor Dr Kupukile Mlambo, to present her proposal to the bank were turned down, until she threatened legal action.

But she says she was surprised that the eventual response centred around the subject of the gold standard, which is different from her proposal to introduce gold coins, which would then be registered with the International Standardisation Organisation to give the currency market value.

“In my letter to the deputy governor Dr Kupukile Mlambo I did not mention anything about returning to the gold standard. I did propose that if the country could have a stable currency we were to manufacture gold coins and register the same with the International Standardisation Organisation.”

Ms Mpofu alleges that according to her research, money was never standardised that is why its market value is tied on to gold and says instead of considering her proposal in light of the financial situation the country finds itself in, the central bank has not bothered to consider viability of her ideas.

She says the RBZ went on to lecture her about the disadvantages of the gold standard, a different concept to her proposal, which included the burden it casts on the country in terms of the availability of gold to back the currency.

“Why are we backing the paper money if we cannot develop that paper, whose responsibility is it to develop that paper, why can’t currencies be standardised like any other product, why has money, which has built cities, phones, sky scrapers, every gadget in use in the world over, got no market value of its own,” she says in the court papers.