RBZ urges banks to fund virtual USD payments

Source: RBZ urges banks to fund virtual USD payments | Herald (Business)

Dr Mangudya

Golden Sibanda

Banks should facilitate all forex transactions involving virtual US dollars without inconveniencing their clients because settlement is a back office activity, the central bank says.

Reserve Bank of Zimbabwe Governor Dr John Mangudya said bankers must not “cheapen” the profession by telling clients that they cannot fund certain transactions because of lack of forex cash.

Dr Mangudya said that it was the duty and responsibility of the banks, specifically bank treasuries, to look for funds and settle transactions for their clients instead of hiding behind lame excuses.

The Governor warned that the time was coming when the apex bank will apply the rules of probity for culprit local bank executives who make unorthodox bank pronouncements in public.

This comes amid reports some banks have been telling their clients to deposit US dollar cash first, while declining virtual US dollar payments, in order to facilitate payments in hard currency.

Notably, the RBZ governor said the absence of an interbank market in Zimbabwe, as the local banks do not trade among themselves, meant the banks cannot be trusted to run the forex auction.

Calls have been made for the Dutch foreign currency auction system, introduced in June and which has been highly successful, to be run by private banks to grow public confidence in its operations.

The central bank chief clarified recently the issue of virtual US dollars, saying these were residual from the dollarisation era that remained on the domestic US dollar transaction settlement system.

The central bank, with permission from then Finance and Economic Development Minister, developed the domestic US dollar settlement platform during the dollarisation era in 2009.

It was felt domestic transactions had to be cleared on a local USD platform, instead of being cleared in the US first before coming back, which would raise the spectre of suspicious transactions.

Dr Mangudya said the US dollars, cash or virtual, rank equal as any other hard cash US dollars and should be treated as such, adding, banks must not decline facilitating payments for virtual US dollars.

“We now use back office activity to put in front, no one should tell you as a bank that I am bank X with deposits of US$200, lent to customers US$500 or gave US$300 loans, therefore I am in deficit of US$100.

“Banks are about intermediation and when you do intermediation it is up to you to look for funds to settle a transaction, which is what Treasuries do.

Treasuries are supposed to fund transactions.

“You can’t go to the public and say ‘I can’t fund you”’.

I had a meeting with BAZ, now led by Ralph Watungwa and told them, “don’t cheapen your profession by talking about settlement in public”.

Dr Mangudya said the fact that banks can’t even settle clients transactions or trade among themselves, meant they cannot be trusted with the auction system, as doing so would spell disaster. – www.ebusinessweekly.co.zw


  • comment-avatar
    Ndebele 3 weeks ago

    Oh yes! Now we have the truth from Zanu! Virtual US Dollars! That is to go with Virtual elections, virtual democracy, virtual corruption, virtual law and order, virtual independents judiciary, virtual professional police force – I mean virtually anything you put your mind to! After 40 years of Zanu we can see that Zimbabwe is virtually the most prosperous country in the world? Virtual is a a brand new description of anything that Zanu wants to be vague about about – like the Gukuruhundi and the Farm Invasions – they were just a Virtual Thingimebob, really?  

    • comment-avatar
      Dr Ace Mukadota PhD 3 weeks ago

      Comrade Ndebele – do not underestimate the ingenuity of ZW’s revered top leaders – most have many PhD’s and even the UN has said ZW has the most educated peoople on the continent of Africa – god help the other countries on the continent is all I can say.

  • comment-avatar
    Dr Ace Mukadota PhD 3 weeks ago

    Forget about bitcoin – ZW should start our very own virtual RTGS ZW dollar comrades. The world would buy it and in time we might become the Switzerland of Africa. Let the circus continue as everyday in April fools day in ZW.

  • comment-avatar
    citizen 3 weeks ago

    Our virtual bank governor is spouting real whoppers!