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From Clemence Manyukwe in Harare
THE Reserve Bank of Zimbabwe will introduce bond coins on December 18 in an effort to ease the shortage of lower denomination currency.RBZ governor John Mangudya said bond coins equivalent to $10 million will be released into the market. They were minted in South Africa.
He also ruled out the imminent return of the local currency.
Mangudya said R30 million coins have also been imported to augment what is already in circulation in the country.
He said the bond coins’ circulation would be limited to Zimbabwe and they are being introduced to ensure provision of change.
“The Reserve Bank is therefore addressing the divisibility and store of value qualities of money through this initiative which has already received significant support from the Consumer Council of Zimbabwe, business organisations and financial institutions,” said Mangudya.
The RBZ expects prices of goods to come down as a result of the introduction of the bond coins whose value would be at par with US cents; trading one for one with US cents.
“The bond coins shall be distributed to the public through normal banking channels and shall be in circulation starting December 18, 2014. Their circulation is limited to Zimbabwe,” the bank chief said.
The bond coins are going to be issued in denominations of 1c, 5c, 10c, 25c and 50c. The 50c coins will only be released into the market in March 2015 due to advanced security features needed in their design and manufacture.
Mangudya said for transparency and accountability purposes, the Reserve Bank shall ensure that the whole process is subject to public scrutiny and both the value and quantity of the bond coins in circulation would be subject to audit by reputable institutions. He said they have already engaged the Institute of Chartered Accountants on the matter.
“The economics of the bond coins is that they’re being introduced to buttress the multiple currency system through the provision of change especially for the US$ notes which have a smallest denomination in circulation in Zimbabwe of US$1,” he told a news conference in Harare.
He said consumers and businesses would be able to exchange the bond coins for paper money at their banks.
“Our expectation is that the introduction of bond coins would necessitate correct pricing of goods and services which hitherto was constrained by the absence of an appropriate system of coins.
“These coins shall therefore go a long way in mitigating the country’s lopsided pricing structure for the convenience of consumers,” added Mangudya.
“The bond coins derive their name from the $50 million bond coin facility that the Reserve Bank arranged for the purpose of providing the coins with intrinsic value. The bond coins would therefore be a good store of value.”
He ruled out the return of the Zimbabwe dollar saying that it would be “careless” and economic “suicide” as there was no production and reserves to anchor it on and the country has foreign currency reserves of up to three months.
“There’re no fundamentals to bring back the local currency. We’ve no appetite to do so, and we can’t be careless to do so and we won’t do that,” he said, while responding to a question on whether this was a way of returning the local currency.
Online Reporter