SENIOR STAFF WRITER
RESERVE Bank of Zimbabwe (RBZ) governor John Mangudya says the central bank is working on the introduction of a $50 bank note for the convenience of the transacting public.
The announcement followed swirling reports of an impending introduction of higher denomination notes of $100 and $200.
In a statement yesterday, Mangudya, however, said there were no plans at hand to introduce denominations higher than the $50 note.
“For the time being, the bank has no plans to introduce $100 and $200 bank notes as suggested in some sections of the media,” Mangudya said.
Economist Godfrey Kanyenze told the Daily News that the critical issue is on currency stability, production and public confidence in the financial services sector.
“The need to issue new high denomination notes is a reflection of the inflationary pressures in our economy. Whether RBZ does print higher denomination notes or not, there is a need to deal with inflation, which is still very high.
“There is a need for fiscal and monetary discipline, authorities need to redress steep increases in tariffs for public utilities as this drives inflation,” he said.
Kanyenze said inflation figures were still high and authorities needed to ensure that the figures continue to drop.
According to the latest Zimstat figures, the month-on-month inflation rate in December 2020 was 4,22 percent, gaining 1,07 percentage points on the November 2020 rate of 3,15 percent.
On his part, Confederation of Zimbabwe Industry (CZI) economics and banking committee chairperson, Jimmy Psillos, said the introduction of higher denominations would not have a negative impact on the economy.
“We do not expect the introduction of higher denomination notes to have any negative impact on inflation but simply to facilitate transactions for the public in circumstances where it is not practical to use electronic money,” he said.
Psillos added that inflation is driven by the amount of money and how fast it circulates in an economy.
“So, injecting more cash into an economy can actually reduce inflation because cash moves much more slowly around the economy than electronic money. The key point is for cash to be injected into the economy in exchange for electronic money,” he said.
The softening inflation figures on the back of market stability is in line with the National Development Strategy (NDS1) plan to lower inflation to within the Sadc inflation target range of three to seven percent by 2025.
NDS1 replaces the Transitional Stabilisation Programme (TSP), launched in 2018 to run for two years.