The Zimbabwean dollar will be decommissioned from the formal system beginning June 15, the Reserve Bank of Zimbabwe (RBZ) said yesterday putting to rest chances of the revival of the banished local unit.
BY NDAMU SANDU
There has been swirling speculation that the local unit would make a rebound, especially after the introduction of the bond coins last year.
RBZ governor John Mangudya said a lot of work had been done since January 2015 culminating in the commencement of the demonetisation process which would start on June 15 up to September 30. This involved giving banks information relating to bank balances and RBZ authenticating that with the information already in its possession.
A Statutory Instrument would be gazetted today to retire the Zimbabwean dollar, Mangudya said.
“Demonetisation is the act or process of removing the legal status of a currency unit. In our case the currency unit is the Z$ that we are demonetising,” Mangudya said.
“The old currency must be retired or decommissioned.”
He said demonetisation was “an important and necessary process to align with best practice and, in the case of Zimbabwe, to comply with the multiple currency system”.
“We cannot have two legal currency systems.”
Mangudya said cash holders can exchange their money at any bank, building society, POSB and Zimpost office.
All cash pay-outs under the demonetisation process shall be exempted from bank charges and government tax and would be disbursed on a no-question asked basis, Mangudya said.
Under the demonetisation process, bank account holders with balances of up to Z$175 quadrillion would be paid a flat $5.
Account holders with balances above Z$175 quadrillion would be paid the equivalent value after applying the UN exchange rate of $1 per Z$35 quadrillion or $1:Z$35 000 (revalued).
Mangudya said for walk-in customers, banks would exchange the Zimdollar at an exchange rate of Z$250 trillion per $1 for 2008 note series and for Z$250:$1 for 2009 notes.
“Cash customers will get their exact US$ equivalent of the converted amount, starting from US1 cent up to $50. Where the US$ equivalent exceeds $50, payment will be made through their respective bank accounts. Corporate customers’ US$ equivalent will be credited into their respective bank accounts,” Mangudya said.
Since the use of the multi-currency regime in 2009, the local unit had not been officially removed from the system raising suspicion that it would be retrieved from the grave.
“We need therefore to safeguard the integrity of the multiple currency system or dollarisation in Zimbabwe. Demonetisation is therefore critical for policy consistency and for enhancing consumer and business confidence,” Mangudya said.
Mangudya said the retiring of the local unit was not compensation for the loss of the value of the Z$ due to hyperinflation but an exchange process.
He said the central bank was doing housekeeping to remove “what has to be removed”.
“We believe the time is now. It is right, appropriate and legal to do so,” he said.