Banks ready for bond notes rollout
BANKS say measures to mitigate the persistent cash shortages being experienced across the country are being implemented, the situation set to ease markedly with the coming of bond notes later this month.
Zimbabwe has been experiencing cash shortages since April and authorities blame the trend on rampant hoarding of the United States dollar and its externalisation. Illicit financial flows coupled with the influx of cheap imports, also drain liquidity in the economy resulting in trade deficit, estimated at about $2.5 billion, according to Zimstat.
Responding to e-mailed questions yesterday, Bankers’ Association of Zimbabwe (BAZ) president Dr Charity Jinya urged calm in the transacting public.
She said the cash crisis would not be solved by banks alone as she encouraged depositors to work with the monetary authorities in reversing the problem by embracing use of plastic money and bond notes.
“A number of factors have culminated in the current cash shortages and collective efforts are being made by various stakeholders to mitigate the challenges. These include the introduction of bond notes by the RBZ, which are aimed at stimulating exports,” said Dr Jinya.
“The RBZ also reduced cash export thresholds for travellers, Government is now restricting unnecessary imports, while banks have also streamlined daily cash withdrawals and are encouraging the use of electronic and digital payment platforms.”
With depositors continuing to flood banking halls especially on pay days, banks have been forced to reduce withdrawal limits, some to as low as $50 per day as others fail to avail cash to clients altogether. This has also put pressure on mobile money platforms, which have similarly capped cash-outs. The cashback facility in major retail outlets has also not been spared.
Dr Jinya, however, dispelled fears the situation could erode confidence in the banking sector, saying deposit trends remain on a positive note.
“You will note that following the announcement of [the introduction of] bond notes in May 2016, the statistics recently released by the central bank show that money supply and banking sector deposits continue to increase steadily, with the annual broad money supply growth rate increasing by 1.71 percentage points to 14.84 percent in July 2016, from 13.13 percent in June 2016.
“Total banking sector deposits stand at just over $6.125 billion as at 31 July 2016, up from $5.91 billion in June and $5.67 billion in March 2016,” she explained.
The bankers’ group said it was geared to roll out bond notes in support of the Government initiatives.
Reserve Bank Governor Dr John Mangudya has said bond notes will initially be issued in denominations of $2 and $5 notes with an estimated $75 million to be injected in the economy by December this year.
“Banks are adequately prepared for the introduction of the notes and will take all necessary steps to ensure a smooth rollout of the instruments in line with the regulatory authorities’ expectations,” Dr Jinya added.
This week Vice President Emmerson Mnangagwa revealed that the Government was working on crafting a law to support the introduction of bond notes as the country needs a mode of transaction it can control.
VP Mnangagwa said the financial services sector was constrained because the legal tender of the country was anchored on foreign currencies, hence Zimbabweans should embrace bond notes.
“Let me assure you that it is not a dream. It is going to be reality. We are going to live with it. Those who can easily realise that reality should begin to accept that the bond notes will be with us. We are in the middle of crafting legislation to introduce the bond notes.
“The current financial service sector in the country is constrained by the fact that currently the legal tender of the country is anchored on currencies that we have no control over.
“We need a mode of transaction which we can control in the country on the basis of security provided by the Exim Bank $200 million,” he said.
Industry bodies and experts have also backed the bond notes approach despite its criticism by some sections of society.