Reserve Bank of Zimbabwe Governor Gideon Gono Wednesday announced a plan to relieve a cash shortage throttling business nationally by unveiling new bank notes in denominations of Z$250,000, $500,000 and Z$750,000, to be issued immediately.
The Z$200,000 bearer cheque or central bank promissory note currently in circulation, until now the highest denomination note, will be withdrawn from circulation as the new bills enter the market, Gono said, and will cease to be legal tender on Jan. 1.
One reason Gono is taking the Z$200,000 notes out of circulation despite the extreme shortage of currency is his desire to discomfit and penalize parallel or black market dealers in foreign exchange and tradeable commodities including food.
Those depositing cash in excess of Z$50 million through year's end will be obliged to account for the origin of the funds. Gono has long been railing at what he calls "cash barons," and recently accused top ruling party officials of being among them.
For ordinary Zimbabweans it remains to be seen if the operation will relieve the cash crunch in time for them to make pre-holiday purchases - such as they are able in an economy where inflation by some estimates is running well over 30,000% and basic commodities such as maize meal, bread and cooking oil are scarce and dear.
Unlike in the last currency-exchange operation in July-August 2006, which the central bank dubbed "Operation Sunrise," and which resulted in large amounts of cash being confiscated from ordinary Zimbabweans, Gono said the holiday season operation would not involve roadblocks or searches. But central bank, revenue and anti-corruption officials would be on hand in banks, the governor said.
Another difference with the previous operation is that the central bank is not trimming zeros from the notes - it removed three when issuing new currency in 2006. Gono said experience showed businesses merely raised prices in response to revaluation.
The Reserve Bank will dispatch mobile exchange teams into rural areas, he said, but warned traditional leaders such as chiefs and village headmen to watch for visitors in flashy vehicles who might try to dump Z$200,000 bills on unsuspecting peasants.
The central bank chief promised that cash shortages will be a thing of the past.
In an interview before Gono announced the new measures, economist and consultant Luxon Zembe told reporter Jonga Kandemiiri he supports the decision not to introduce a new currency - as distinct from bearer cheques - in light of the economic crisis.