RBZ unveils bond coins worth $10 million

By Kudzai Chawafambira

HARARE – The Reserve Bank of Zimbabwe (RBZ) yesterday unveiled a new set of bonded coins worth $10 million, which will start circulating on December 18.

Central bank governor John Mangudya said the introduction of the bond coins on the local market was part of efforts to ease the shortage of change, but allayed fears that they were clandestinely bringing back the Zimbabwe dollar.

“The economics of the bond coins is that they are being introduced to buttress the multiple currency system through the provision of change especially for the US dollar notes which have a smallest denomination in circulation in Zimbabwe of $1,” he said.

Mangudya added that the RBZ was, therefore, addressing the divisibility and store of value qualities of money through the initiative, which has already received significant support from the Consumer Council of Zimbabwe, business organisations and financial institutions.

“The bond coins would be at par with the US cents, that is trading one for one with US cents,” he said.

The special coins of 1c, 5c, 10c and 20c are part of a five-year $50 million bond that government had secured to give them value.

The 50c coin will be introduced in March next year.

He ruled out the return of the local currency saying that it would be “careless” and economic “suicide” as there were inadequate reserves to anchor it and that the country had foreign currency reserves that could only last up to three months.

“There are no fundamentals to bring back the local currency. We have no appetite to do so, and we can’t be careless to do so and we won’t do that,” he said.

According to Mangudya the initial $10 million coins are equivalent to only two percent of total current bank deposits and would be maintained at below 10 percent.

He noted that under normal circumstances, coins in issue should be equivalent to between 20 and 25 percent of total bank deposits.

At least 30 million rand worth of coins would also be imported to augment the bond coins.

“For transparency and accountability purposes, the Reserve Bank shall ensure that the whole process is subject to public scrutiny and that both the value and quantity of bond coins in circulation are subject to audit by reputable institutions.

“We have already engaged and appraised the Institute of Chartered Accountants of Zimbabwe in this regard,” the apex bank chief said.

He also stated that the new bond coins’ circulation will be limited to Zimbabwe.

Zimbabwe ditched its local currency in favour of foreign currencies in January 2009 after hyper-inflation reached 500 billion percent.

Zimbabwe mainly uses the United States dollar and South African rand for transactions but businesses usually round-off prices and give consumers vouchers or sweets as change because the country lacks coins. Daily News