The Reserve Bank of Zimbabwe (RBZ) is set to introduce 50c bond coins on Tuesday to further boost price competitiveness, central bank boss John Mangudya has said.
BY OUR STAFF
The new coins will join the 1c, 5c, 10c and 25c that were introduced in December last year.
Mangudya said the bond coins are indexed at par or one to one with the US cents and will circulate side by side with all the currencies under the multiple currency system.
“The introduction of the 50c bond coins is aimed at completing the series of small denomination coins which have helped to tame prices within the economy,” Mangudya said.
Of late, prices of basic commodities have fallen due to the availability of the small denomination coins. Bakers have reduced the price of bread to about 90 cents from $1 in response to government’s call to re-align prices.
In his monetary policy statement in January, Mangudya said the bonded coins were meant to boost competitiveness through instilling or promoting a proper pricing system for goods and services in the country under the multiple currency system. Competitiveness is basically a price phenomenon.
“…it is clear the coins are necessary in any economy for providing change and to ensure that money is divisible. Consumers benefit with a low denomination coin as it is proven worldwide that businesses would raise prices without the penny or cent. Coins are therefore essential to eliminate the ‘rounding tax’ that reduces consumers’ purchasing power,” Mangudya said then.
He said the system of rounding up prices leads to uncompetitiveness of local products and a shift of demand to imports. Rounding up of prices, he said, was regressive and hurts those least able to afford because they make small cash purchases.