Country should brace for bond notes ‘side effects’
EDITOR — In my view, the introduction of bond notes, although laced with so many good intentions, is bound to bring with it many negative unintended economic consequences.
For starters, the notion that the bond note should serve solely as a medium of exchange and only recognisable within Zimbabwe’s borders carries with it the risk of being not wholesomely accepted.
The RBZ is missing the point that for any form of currency to really perform its function of “medium of exchange” it must be generally acceptable in the first instance.
The negative responses that have been generated in some circles should have served as a warning and if the RBZ really needed to address the issue of USD cash shortages they should have put so much energy in pushing and persuading for the use of plastic money, have the informal sector open accounts and lessen the burden of using hard cash almost in the majority of transactions.
Acceptability of bond notes cannot be forced down the people’s throat. It does not matter what the RBZ says that each bond note is at par with the USD, the people know that a USD is worth more than a bond note. I foresee a scenario where leveraging activities will take place in the banks with gullible bank staffers dishing out only bond notes and keeping the USD to themselves for black market activities.
The USD risks disappearing from the general public and it will become a trading tool on the black market.
The RBZ seems to not have taken the risk highlighted above into consideration. The RBZ just wants people not to queue at banks, have money (bond notes) in their pockets and whatever economic issues that arise are not of concern to the central bank.
There is a real risk of spiralling inflation that will result from the cost of USD on the black market as traders will resort to buying the USD and other foreign currencies from the black market using bond notes received from the general public.
If the current USD leakages are the main driver of the cash shortages the RBZ should just take the USD out of the multi-currency basket, or better still take the bull by the horns and introduce the Zim dollar so that we do not have an economy where some privileged individuals will have one form of a strong currency over the others being forced to accept a paper they know is not worth anything.
Wiping out queues at the banks by dishing out Zim bond notes will lead to other uneconomic queues elsewhere.
The economy risks the emergence of yet another “parellel market” where goods are priced in bonds and hard currencies. Alex Makwira, Harare.