Bitcoin is the currency that’s in the news – but another one is flying, too
Have you heard about the currency that’s rocketing in value by the minute? That everyone’s talking about and wants to own a piece of? You must be meaning Bitcoin, of course, or one of its “cryptocurrency” rivals such as Ethereum, Litecoin, Zcash, Dash or Ripple.
No. I’m describing another quite different – but equally fascinating – currency phenomenon. Demand for former Zimbabwe banknotes as souvenirs of Robert Mugabe’s economically catastrophic regime is soaring, following the end of his presidency. And so is their price.
Among the most potent symbols of the financial destruction Mugabe wreaked in Zimbabwe are the banknotes issued during the hyperinflationary period of 2008-09. Those notes – instantly recognisable by their long strings of zeros – are now fetching record prices, with dealers saying demand is “off the scale”.
Some of these Zimbabwean banknotes, which had negligible or zero spending power when issued, now fetch more than £100. In the United States, bundles of uncirculated Zimbabwe dollars dating from the worst of that country’s crisis are now on sale for hundreds of thousands of American dollars.
Banknote World, one of the biggest dealers in Zimbabwe notes, based in Irvine, California, said: “This has been one of our busiest periods in years. Political events such as regime change or the death of dictators always spark demand. When Gaddafi died in 2011 there was a surge of interest in Libyan dinar notes. People see these as amazing souvenirs, they are something to buy and keep.”
Inflation had reached 250 million per cent – and then it really started to take off
Abdullah Beydoun of Banknote World acquired a stash of Z$100 trillion notes in 2009 and described how then he “struggled to sell them for 50 cents”.
Today he’s doing a brisk trade at around $139 (£103) per note, although some eBay auctioneers will sell them for less.
The note pictured below I purchased myself from a British dealer in 2012 for £5, which gives an idea of how price growth has gained momentum.
Zimbabwe’s plunge into hyperinflation between 2004 and 2009 remains of huge interest erest to economic historians, but at the time it was largely eclipsed ed by the banking crisis that gripped ipped America and Europe.
Years of economic mismanagement under Mugabe combined in 2008 08 with severe drought and a chronic foreign currency shortage, causing a savage e spike in prices.
The last official locally produced figures put annual ual inflation at above 250 million lion per cent in July 2008. Beyond yond that point, measures of inflation flation were undertaken by independent pendent economists, who suggest that inflation peaked in November mber 2008 when prices doubled every ry 24 hours.
Zimbabwe’s central bank nk “redenominated” the currency on several occasions by announcing that existing notes in circulation suddenly represented a higher value.
But its more spectacular response was to design and produce new notes: first in tens of millions, then hundreds of millions, billions and finally trillions of Zimbabwe dollars.
The highest denomination bill ever produced by the Bank of Zimbabwe – and it was in issue for a few weeks – was the Z$100 trillion note (100 followed by 12 zeros) pictured. Shortly afterwards, in 2009, local currency was replaced by the US dollar and prices finally stabilised.
The troubled country’s bout of hyperinflation is believed to be the worst ever save for a brief spell in Hungary immediately after the Second World War, when prices doubled every 15 hours. The Hungarian authorities then issued what is believed to be the highest-denomination banknote in history: a 100 quintillion note (100 followed by 18 zeros).
The notorious German hyperinflation of 1923, which gave rise to iconic images of banknotes being burned as stove fuel, was more modest, with prices doubling every few days at its worst.
In recent weeks I’ve started to receive the usual seasonal press releases about the annual increase in the price of turkeys and Christmas crackers. Rest assured, the increases aren’t in quite the same league.
British pensioners retiring in Europe are one of the few groups who have some certainty of the post-Brexit landscape. A deal to ensure British state pensions paid to expats living in the EU continue to benefit from the “triple lock” was confirmed in September. The agreement, which also covers people in countries that are part of the European Economic Area and Switzerland, means pensions increase by the highest of earnings, inflation or 2.5pc.
However, there was no reprieve for the more than half a million expats with “frozen” pensions. This group, mainly living in Commonwealth countries, do not get the annual increases. Lobby groups in Australia and Canada have been calling for a change in the law for years.
They argue that the Government’s position discriminates randomly and that the state saves billions by avoiding health and social care costs they would otherwise incur. Britain is the only developed country that pays pensioners based on where they live, the groups claim. Nigeria is the only country out of the 10 most populated by “frozen” pensioners where the pound has strengthened (see table).
Nigel Nelson, 65, moved to Kelowna in Canada in 2008 after taking early retirement from his job as an accountant at a London law firm.
Initially living off his private pension savings, which can be accessed from age 55, he began
Australia Canada New Zealand South Africa Japan India Thailand Pakistan Nigeria Hong Kong
British state pensions paid in Canada do not increase. But those in the US, on the south side of the Niagara Falls, do