Facing an acute national shortage of cash in banks and on the streets, Reserve Bank of Zimbabwe Governor Gideon Gono has said he is planning to launch a new set of banknotes before Christmas, repeating a maneuver conducted in 2006.
Gono told the government-controlled Herald newspaper that the move is meant to solve the cash crisis and strike a “decisive deterrent blow” against speculators in the parallel market in foreign exchange as well as in essential goods of all kinds.
Cash is in such short supply in Harare that hard currency can be purchased for cash Zimbabwe dollars on the parallel market for a quarter the price via bank transfers, reflecting the premium for banknotes needed to conduct ordinary business.
Gono said cash in circulation nationwide as of November 15 stood at Z$58 trillion, but that financial institutions across the entire market held only about Z$1 trillion in their tills, leaving some Z$57 trillion in cash “floating somewhere out there,” the central banker told the Herald. But some economists questioned the figures.
Chitungwiza resident Kelvin Moyo told reporter Blessing Zulu of VOA's Studio 7 for Zimbabwe that consumers must get up early to withdraw cash from the banks.
Economist Godfrey Kanyenze, director of the Labor and Economic Development Research Institute of Zimbabwe, an arm of the country's main labor union, said introducing a new currency won't resolve the country’s economic crisis.
Zimbabwe's central bank lopped three zeros off the national currency and distributed new banknotes in July-August 2006 in a chaotic operation that resulted in financial losses for many individuals and business, sometimes through police confiscation under the pretext that those holding large amounts of cash came by it illegally.