Adieu to Zimbabwe’s bond note era! Reserve Bank introduces RTGS Dollars

The Reserve Bank of Zimbabwe’s Governor John Mangudya has introduced a new form of money known as RTGS Dollars on February 20 with immediate effect abandoning bond notes and coins.

These RTGS Dollars consist of RTGS balances, bond notes and coins, John Mangudya of Reserve Bank of Zimbabwe said while announcing the currency changes. The newly introduced RTGS Dollars are not tied on the 1:1 rate against the US Dollars. It will be sold at a variable exchange rate in the formal banking system.

It is believed that due the majority of economic problems in Zimbabwe has the root to ‘1:1 against the US Dollars’ despite the government does not have reserves to support this exchange rate.

Here we’ve mentioned Mangudya’s brief statement presented in Harare on February 20:

1. Denominating the existing RTGS balances, bond notes and coins in circulation as RTGS dollars in order to establish an exchange rate between the current monetary balances and foreign currency. The RTGS Dollars thus become part of the multi-currency system in Zimbabwe. The legal instrument to give effect to this has been prepared.
2. The RTGS Dollars shall be used by all entities (including government) and individuals in Zimbabwe for the purposes of pricing of goods a. services. record debts, accounting and settlement of domestic transactions.
3. The use of RTGS Dollars for domestic transactions will eliminate the existence of the multi-pricing system and charging of goods and services in foreign currency within the domestic economy. In this regard, prices should remain at their current levels and or start to decline in sympathy with the stability in the exchange rate given that the current monetary balances have not been changed. In this respect, the Reserve Bank of Zimbabwe will commit all its efforts to use the instruments at its disposal to maintain the stability of the exchange rate.

Zimbabwe’s central bank is considering devaluing its quasi-currency as part of a raft of reforms to the nation’s foreign-exchange system.