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Zimbabwe's Central Bank Moving Toward Issuing New Currency - Again

Reserve Bank of Zimbabwe Governor Gideon Gono has announced that he will soon impose a limit on the amount of cash which individuals and businesses can deposit in bank accounts in a move seen as preparatory to issuing a new currency.

Gono said he wants cash to flow out of parallel markets for currency and goods back into the banking system, which in recent days has experienced cash shortages.

The state-controlled Herald newspaper said that that effective December 1, individuals will be allowed to deposit just Z$50 million (US$35) in cash per day without explaining its source, while small businesses will be allowed to deposit Z$200 million a day.

Businesses which handle large amounts of cash will be allowed to deposit Z$1 billion dollars a day. Businesses seeking to deposit more than those prescribed amounts will be asked to submit evidence to prove the excess arose from legal activities.

Central bank sources said some Z$30 trillion, or 51% of the total cash in circulation, is held outside the banking system in which some Z$28 trillion in cash is held.

Gono has warned time is running out for the "cash barons" he accuses of withholding cash from the banking system, but has refused to say when a new currency will be launched. A previous currency exchange took place in August 2006, but inflation running at some 15,000% annually has made ordinary transactions arduous.

Director Godfrey Kanyenze of the Labor and Economic Development Research Institute told reporter Blessing Zulu of VOA's Studio 7 for Zimbabwe that Gono should not attack the so-called cash barons as his own monetary misdeeds are greater.

More reports from VOA's Studio 7 for Zimbabwe...