Zimbabwe: Gono seeks to reintroduce Zim dollar to finance Zanu-PF activities?

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Banks in Zimbabwe on Monday re-introduced foreign currency denominated
cheque’s after they where scrapped at the height of hyperinflation last year.
This was another chapter to the southern African country’s economic recovery signals from economic collapse.

The Bankers’ Association of Zimbabwe president John Mangudya said local commercial banks would start with immediate effect to issue their customers with chequebooks, for the first time in over a year. “Businesses and members of the public are advised that all commercial banks in Zimbabwe will start issuing US$ denominated cheque books to their valued customers with effect from Monday 17 August 2009,” said BAZ.

The association said the US dollar denominated cheque books were valid in
Zimbabwe only and were not eligible for Zimbabwe dollar accounts. “Customers should not use cheque books for their Zimbabwe dollar accounts.” But clients will be limited to make cheques up to a maximum of $200 for individuals and $500 for companies.

Until now, business has been almost exclusively with foreign cash. Bank transactions grounded to a complete halt while business was conducted nearly exclusively in cash black market deals with the US dollar.

As the value of the Zimbabwe dollar fell drastically over single days, payment by cheque – taking several days to clear – became pointless. Even same-day electronic transfers were stopped because of sharp falls in the Zimdollar’s value between morning and afternoon.

However, all the madness came to a halt after the inauguration in February of a power-sharing government between Mugabes Zanu (PF) party
and opposition leader Morgan Tsvangirais Movement for Democratic Change.

The MDC took over the finance ministry and immediately abolished the
Zimbabwe dollar and established the US dollar and the South African rand as official legal tender. Inflation is now about 3%. Commercial banks closed clients’ Zimbabwe dollar accounts and allowed them to open fresh accounts in hard currencies.

However, on Monday controversial Central Bank governor Gideon Gono told parliament that there is genuine need to re-introduce the worthless Zimbabwe currency.

Gono said the re-introduced Zimbabwe dollar would be pegged against gold available. “You can also redeem your Zim dollar in return for an ounce of gold. Say, if you want to keep gold not cash, you can go to your bank and get an equivalent of ounces of gold to the Zim dollar you have, so we
will be backing our money with reality on the ground. Such an approach
is not inflationary because you are anchoring your money on productivity.”

He added, “We can even print gold coins. The Zim dollar can then gain
as it is anchored on gold. We need to think outside the box,” he said.

But his plan has been dismissed by most Zimbabweans who said Gono is
been used by Zanu PF to “destabilize the economy that is recovering”.
People say Gono wants to print local currency to finance Zanu PF activities.

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