Zimbabwe to introduce $75m worth of local bank notes

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Zimbabwe to introduce $75m worth of local bank notes

9:58 CAT | 15 Sep 2016

Reuters / Doubling up: Reserve Bank of Zimbabwe governor John Mangudya. The central bank had to increase its purchases of dollars to $40m a month, the governor said in May.

Zimbabwe will introduce local bank notes, known as “bond notes”, at the end of October, the central bank governor said on Thursday, raising fears of a return to a domestic currency abandoned in 2009 due to hyperinflation.

Zimbabwe will circulate the equivalent of $75m in the notes by the end of the year, governor John Mangudya said, adding that the bank was still “very far” from re-introducing a local currency.

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President Robert Mugabe has said local bank notes, which he called a “surrogate currency”, would help prevent foreigners taking US dollars out of the country.

Zimbabweans are worried that introducing “bond notes” to ease dollar shortages could open the door to rampant printing of cash, as happened in 2008 when inflation hit 500-billion percent, wiping out savings and pensions.

“The bank has taken note of all public concerns over the bond notes issue … which comes from a lack of confidence in the economy,” Mangudya said.

Mangudya also said the central bank had agreed with domestic banks that interest rates should be capped at 15%.

Source: Reuters