RBZ sets 2016 benchmark for notes
THE Financial Intelligence Unit (FIU), a crack investigations arm under the purview of the Reserve Bank of Zimbabwe (RBZ), will move to take “corrective action” against traders rejecting bank notes, central bank governor John Mangudya has said.
Zimbabwe’s informal sector has assumed significant influence in the aftermath of an industrial bloodbath that has seen many formal businesses collapse.
Controlling over 60% of the country’s gross domestic product (GDP), informal operators rule everything from trade in goods and services to a thriving black market for currency.
But, in the most shocking phase of market delinquency that has exposed serious weaknesses in central banking, informal market traders have recently been rejecting several ranges of Zimbabwe dollars, claiming they have ceased to be legal tender.
In a mid-term Monetary Policy statement released on Thursday last week, Mangudya said all notes issued from 2016 remained legal tender and threatened unspecified action against informal market rulers.
“All bank notes and coins issued by the bank since 2016 remain legal tender in Zimbabwe,” Mangudya said.
“The bank notes and coins have not expired and hence the behaviour by some traders to reject some of the notes in circulation to the detriment of members of the public is deplorable and an unfair way of conducting business.
“That wayward behaviour is spurred by negative ulterior motives which are associated with arbitrage and the practice of not banking money.
“The bank encourages the public not to be short-changed by such traders and to report such unbecoming behaviour to the bank or the Financial Intelligence Unit (FIU) or the Zimbabwe Republic Police for corrective action to be taken against such malpractices,” Mangudya said.
Consumers have had to contend with a sea of payment modes when paying for goods and services.
This includes at least four currencies such as South African rand, Zimbabwe dollar, real time gross settlement system and several mobile-based payment systems.
With each method that a consumer chooses, traders across markets demand different prices, triggering market mayhem.
The first casualty of the market’s attitude towards the domestic currency was the $5 note, which was rejected as the RBZ began issuing several denominations of notes from 2019.
The $2 note was also rejected, but mostly after hyperinflation rendered trade in smaller denomination notes impractical.
The central bank has generally withdrawn the smaller denominations, after failing to crack down on market manipulators who take advantage of currency volatility.