$9,6m bond coins now in circulation

Source: $9,6m bond coins now in circulation – DailyNews Live January 3, 2017

HARARE – About $9,6 million worth of bond coins is now circulating in the
Zimbabwean financial system, after the country pumped over $6 million
worth of the coins since September last year, the Reserve Bank of Zimbabwe
(RBZ) said.

With circulation of bond notes – backed by a $200 million Afreximbank
facility and pegged at par with the United States dollar (US$) – having
begun last year in October, the central bank is quickly approaching its
$10 million bond coin ceiling.

In its report for October 2016, the RBZ said the value of coins in
circulation had increased from the $9,4 million recorded in September to
close October at $9,6 million.

When the coins were introduced in September 2015, $3,5 million were in
circulation with the value progressively increasing to $4,4 million in
October, $5,7 million November, $7,1 million as at December 2015.

In January 2016, bond coins valued at $7,3 million were in circulation, as
the figure came to $7,4 million in February.

At the close of the first quarter in March 2016, bond coins valued at $7,6
million were in circulation while April saw $7,7 million worth of bond
coins in the system.

In May, the coins pegged at $8 million found themselves in the system as
the figure went up to $8,1 million in June as $8,2 million worth of the
coins were recorded for $8,2 million.

The RBZ has said the coins will be maintained below 10 percent of the
banking deposits which currently stand at around $5 billion as the 1c, 5c,
10c and 20c coins are part of a five-year $50 million bond that government
secured to give them value.

Zimbabwe – which ditched its local currency in favour of foreign
currencies in January 2009 after hyperinflation reached 500 billion
percent – has seen widespread scepticism around the surrogate coins and
notes.

Ecuador is another country that uses the greenback as its currency and has
special coins, which have the same denomination and value as US coins.
Panama also uses the Panamanian balboa, a bond coin equivalent.

In December last year, the central bank announced that the total amount of
bond notes in circulation stood at $29 million, following disbursement of
an additional $12 million of the parallel currency to the initial bond notes
injection.

While central bank governor John Mangudya has said the apex bank remains
“encouraged” by the circulation within the domestic economy of bond notes,
there have been fears that the central bank’s plan to introduce bond notes
to ease the dollar shortage could open the door to rampant money printing.

Overprinting is nothing new to Zimbabwe as it happened in 2008 when
inflation hit 500 billion percent, wiping out people’s savings and
pensions.

Various international think-tanks have already warned the RBZ not to
monetise fiscal deficit on the back of dwindling revenues and economic
decline.

COMMENTS

WORDPRESS: 1
  • comment-avatar

    This is fantastic news. Now we have a Command Casino Economy. Command Agriculture is the new buzz word in Zanu and the CFU. It is a brilliant idea – from Joint Operation Command.