Mangudya speaks on ‘special coins’

via Mangudya speaks on ‘special coins’ – DailyNews Live 28 August 2014 by Kudzai Chawafambira

HARARE – Zimbabwe is set to introduce a new regime of “special coins” indexed at par with the United States coins by December, the Reserve Bank of Zimbabwe clarified yesterday.

The coins, which are being imported, will be introduced as a medium of exchange and are aimed at augmenting currencies in circulation especially in change.

The measure comes as Zimbabwe is battling a liquidity crisis and small change challenges.

Reserve Bank of Zimbabwe governor John Mangudya told the Daily News yesterday that they were expecting to introduce the special coins before the end of December 2014.

“Indeed, they would be convertible just like the notes,” Mangudya said.

He said “it stood to reason that we need the special coins to be the divisibility units of the USD notes, as such, the special coins would need to be at par with the US cents.”

“Divisibility is one of the most important characteristic of money. The rand coins are also being imported to augment the available stocks within the economy,” said the central bank boss said.

He was tight-lipped on the features of the coins, source and name.

“I cannot tell you the source of the coins,” he said.

“I need to protect the integrity of this market. The RBZ will only share the information on cost once we receive the final invoice from the suppliers, whom we expect to meet next month.”

In his monetary policy statement announced on Monday, Mangudya said the “special coins” denominations will range from one cent to 50 cents.

“Rand coins of 10c, 20c, 50c, R1,R2 and R5 are also being imported to buttress the multiple currency system which is dominated by US$ and Rands,” he said.

The central bank chief added the coins would be distributed to business through normal banking channels from the Reserve Bank.

“The Bank through its Bank Use Promotion Unit shall monitor that the coins are utilised as change to bring decency in the economy,” he said.

Economic experts say the assurance by the RBZ governor will assist in instilling investor confidence in the economy as well as strengthening the financial services sector.

Tony Hawkins, a renowned University of Zimbabwe business academic, said the use of local coins was intended to reduce transaction costs and make it easier for retailers and consumers to conduct business.

He said the use of local coins within a single currency area was not uncommon.

“Members of the SA rand area issue local coins despite being pegged to the rand,” Hawkins said, adding that “it has been stated repeatedly by the Finance minister (Patrick Chinamasa) and this week by the governor, that there are no plans to bring back a local currency.”

Zimbabwe ditched its local currency in 2009 after it was rendered worthless by hyperinflation. Government consequently adopted more stable currencies including the US dollar as well as the South African rand and Botswana pula among others.

Last week, the Bankers Association of Zimbabwe (Baz) said it was imperative for government to retain the multi-currency regime to maintain price stability as well as to strengthen the banking sector for overall economic growth.