Multiple currency regime to stay, says RBZ chief

via Multiple currency regime to stay, says RBZ chief – DailyNews Live 1 July 2014

HARARE – Reserve Bank of Zimbabwe (RBZ) governor John Mangudya has said Zimbabwe will continue using the multiple currency system for the foreseeable future.

Mangudya yesterday told the parliamentary portfolio committee on Finance and Economic Development that the multiple currency system had stabilised the economy.

“Our advice on the issue is that let us maintain the multiple currency system because it has brought stability and discipline,” Mangudya told the committee, chaired by Mutoko South Zanu PF MP David Chapfika.

“I think we are now disciplined as a country compared to the Zimbabwe dollar era.”

This comes as Finance minister Patrick Chinamasa recently indicated that he does not foresee the immediate return of the shelved Zimbabwean dollar.

The country adopted a basket of multi-currency in 2009, dominated by the United States dollar, to replace the local currency which had been devastated by inflation which reached a peak of 238 million percent by August 2008.

However, since the re-election of the Zanu PF-led government last year, there have been consistent calls of a Zimbabwe dollar return by some politicians to help ease liquidity challenges in the county.

But Mangudya yesterday emphasised the continuation of the multiple currency regime, saying it would help economic recovery.

Zimbabwe’s economy, which registered an average of seven percent growth between 2009 and 2012 during the inclusive government era, is slowly receding into recession due to low aggregate demand, an acute liquidity crisis, deflation, massive power shortages and company closures among other things.

As part of efforts to combat the biting liquidity situation in the country, the central bank early this year added the Chinese Yuan, Japanese Yen, Indian Rupee and Australian dollar to the basket of foreign currencies which include the South African Rand, Botswana Pula, the British Pound and the Euro.

Mangudya, however said there has been low uptake of the four additional currencies as people prefer to trade in the USA dollar, the Rand or the Sterling pound.

“We have  a basket of these multi- currencies including the new ones we introduced early  this year…and few people opened accounts for them…but they are still being accepted in the country,” he said.

The former CBZ chief executive, who began his duties at the central bank on May 1, also said RBZ would soon play its role as the bank of government and lender of last resort.

“It’s now back to basics in terms of banking,” he said, adding that the central bank would by July 15, 2014 resume its role as banker to government.

“We are currently doing the transfer of the account from CBZ in an orderly fashion so that we minimise disruption of banking activities,” he said. “We don’t believe in doing things abruptly.”

Mangudya replaced former Reserve Bank governor Gideon Gono who retired in November last year after a decade on the helm.

COMMENTS

WORDPRESS: 4
  • comment-avatar
    Mscynic 8 years ago

    See the Zambian model.

  • comment-avatar

    “I think we are now disciplined as a country compared to the Zimbabwe dollar era.” What a load of rubbish? Where was the discipline when Cuthbert and co were paying themselves these high salaries.
    “We are currently doing the transfer of the account from CBZ in an orderly fashion so that we minimize disruption of banking activities,” What activities when you are forcing companies to close because of your policies. Mad people with Mad Ideas.

  • comment-avatar

    simple – the more currencies you have to fiddle about with the more the banks can sting the customers – wake up ZW go with the USD and forget about ever bringing back the discredited ZW dollar

  • comment-avatar
    John Thomas 8 years ago

    They know very well that any currency printed by ZANU will be rejected. This is true now and for any time in the future.