Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya has announced plans to import more cash to ease the current shortages that has seen citizens being charged up to 40 percent premiums by unscrupulous dealers operating from street corners.
By Tadiwa Changachirere
Presenting the 2020 Monetary Policy statement yesterday, the Central Bank chief said the quantity of bank notes and coins in circulation will be increased.
“Following the Monetary Policy Committee (MPC) decision in October 2019 to increase the quantity of banknotes and coins in circulation to try and reduce the inconvenience being faced by the public in accessing their cash at banks, the Banks has imported additional banknotes and coins to ameliorate this challenge,” said Dr. Mangudya.
As of 31st of December 2020, an additional amount of ZW$150 million was distributed in the country, to give a total of ZW$1.1 billion worth of notes and coins that is in circulation.
“This ZW$1.1 billion represents 3.2% of total banking sector deposits of ZW$34.5billion as at 31 December 2019.As per normal banking practice, the notes and coins were sold at local banks for distribution to clients in exchange for RTGS balances, to neutralise any expansion of money supply and therefore, inflation.
“Accordingly, the cash injections to date have not increased money supply and thus managing inflationary pressures,” said Dr. Mangudya.
“The Bank will continue to gradually increase the notes and coins to the desired optimal proportion of banknotes and coins in circulation of up to 10 percent of deposits agreed by the MPC to meet the cash demand. Moreover, the bank will gradually introduce notes in larger denominations to improve efficiency and convenience to the public,” he added.