THE Reserve Bank of Zimbabwe will introduce a new set of higher denomination bank notes over the next few weeks to increase physical money supply and curb prevailing cash shortages.
Authorities have given the greenlight for the introduction of $10 and $20 bank notes worth close to $600 million. The money will be drip-fed into circulation beginning this quarter. Currently, around $1,4 billion in cash is circulating. The new notes are expected to take the total to $2 billion.
Designs for the new denominations have already been approved and printing of the new notes is underway. Zimbabwe has $2 and $5 notes and coins, which make cash transactions cumbersome, with small transactions now requiring huge wads of notes and coins due to high inflation.
Cash shortages have resulted in long queues at banks, spawning a thriving illegal cash market where huge premiums of up to 40 percent are charged to convert electronic money into cash. In addition, cash shortages have led to the creation of a multi-tier pricing system, where prices of a single product differ depending on the customer’s mode of payment.
Authorities believe that the new notes will enhance convenience to the transacting public and eliminate the illegal cash market. Member of the RBZ Monetary Policy Committee Mr Eddie Cross told our Harare Bureau that an announcement of the new notes was imminent.
“The plans are far advanced and higher denomination notes will be made available to the public sometime later this month. The Reserve Bank will make the announcement. They (the notes) are being printed and the appropriate date will be announced soon. We had a meeting yesterday of the MPC and the Governor confirmed to us that the rollout will be in stages so it won’t be a full range of notes initially, but it will only be higher denomination notes.”
He said banks will be required to exchange their electronic balances for physical cash to ensure that no new money is created.
RBZ deputy governor, Dr Khuphukile Mlambo, refused to disclose the rollout plan, saying it was “sensitive”.
“That is a very sensitive issue . . . I cannot comment on it either way because I am working from Bulawayo these days,” said Dr Mlambo. RBZ Governor, Dr John Mangudya, did not respond to questions from our Harare Bureau.
Soiled notes, said Mr Cross, will be removed from circulation as the new notes are introduced onto the market.
— Sunday News