PER­SONAL AC­COUNT

The Daily Telegraph - Your Money - - FRONT PAGE - Richard Dyson

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

Brod­beck Sam

Coun­try

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

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