RBZ moves to settle US$83m bank debt

state of the economy since the turn of the new year.
He pointed out that the central bank would soon convert the statutory reserve liabilities to banks into a security for accessing lines of credit in the sector.
The RBZ used financial institutions and other stakeholders’ money during the economic crisis immediately preceding the formation of the inclusive Government.
The discounted and tradable paper will serve as the security that was lacking for banks to get overnight accommodation from the RBZ and interbank market.
“The Reserve Bank currently owes US$83 million to banks in statutory reserves, contributing to some of the prevailing liquidity challenges in the financial system.
“To facilitate orderly transactions in the money market, Treasury is introducing discounted and tradable paper against Reserve Bank statutory reserve liabilities to banks willing to participate,” said Minister Biti.
Modalities and terms and conditions of issuance will be developed in conjunction with the Reserve Bank and the Bankers’ Association of Zimbabwe.
The move could overcome some of the challenges around collateral that banks were facing in accessing the US$7 million lender of last resort funds at RBZ.
The plan to enhance access to credit comes at a time when Treasury is preparing to release a further US$20 million in support of the central bank’s lender of last resort requirements.
Discussions with a regional financial institution for the provision of US$100 million for the same purpose could also be concluded early next month.
These proposals form part of cocktail of measures the RBZ will adopt in efforts to ease the liquidity crisis pervading the entire banking sector and economy.
Liquidity has been tight between December and this month due to frequent high value transactions caused by Real Time Gross Settlement transfers logjams.
Problems of tighter liquidity conditions were also partly a result of high value transfers requisitioned by Government for salaries and budgetary projects.
In the wake of the RTGS system gridlock authorities will stagger high value transactions to give banks sufficient time to plan for such transactions.
They will also introduce a system of notice periods for high value transactions to give banks adequate time to prepare for budget payments. Transaction values will determine notice periods to a maximum of seven days.
In addition, the central bank will continue monitoring the status and performance financial institutions to enhance the operation of the financial system.
There will also be stronger collaboration and information sharing by the entire financial sector regulators and this will include the Insurance and Pensions Commission and the Securities Commission of Zimbabwe.