Panic withdrawals hit local banks

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HARARE – Zimbabwe's banking sector has been hit with massive withdrawals by risk-loathing depositors, with banking sector sources indicating that reports of the looming introduction of “bond notes” have further unsettled bank customers.

This comes after the Reserve Bank of Zimbabwe (RBZ) governor John Mangudya announced plans to introduce local bond notes and imposed new caps on cash withdrawals in a desperate bid to ease mounting cash shortages.

The RBZ capped bank and ATM withdrawals at $1 000 per card daily and also imposed limits on the amount of cash individuals can take out of the country from the current $5 000 to $1 000.

An acceleration of deposit withdrawals risks worsening a mounting liquidity crunch in a country desperate for cash to revive an economy reeling after stabilising briefly when government adopted a multi-currency regime.

One banking sector source told the Daily News, liquidity in the banking sector was “sharply diminishing.”

He suggested that this could have something to do with reports of the introduction of bond notes, which have been widely viewed as a resurgence of the Zimbabwe dollar.

Panic over the comeback of the Zimbabwe dollar flies in the face of assurances from government ruling out the return of the local currency into circulation soon, despite a liquidity crunch affecting government business.

Another banking sector source said deposits were plummeting due to significant withdrawal levels.

Mangudya clarified to editors on Friday that there were no plans to reintroduce the Zimbabwe dollar through the backdoor.

“We have no hidden agenda. We are not removing the multi-currency system, we’re actually giving it more life through more exports,” he said, adding the 5 percent export incentive will be paid out in bond notes, because if the RBZ paid in US dollars, it will simply vanish, adding his move was actually a $200 million economic stimulus to stimulate local production and exports.

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