The Sunday Mail
Bond coins will inject liquidity in the market and provide a “plausible remedy” to challenges of currency divisibility that was causing overpricing of certain goods and services, an economist has said.
Mr Respect Gwenzi said the coins to be released this week will be crucial to both Government and business.
“The advent (of coins) augurs well as minor, but effective, stimuli in money supply at (around) two percent of the current total deposits. This is no mean feat in an economy facing liquidity challenges,” he said.
The coins will also necessitate swift, undistorted transactions and result in lower prices of goods given the ready availability of change.
But Mr Gwenzi raised the red flag in terms of “what securitises the coins” to ascertain their real value which has been pegged at par with the US dollar.
“Conventionally, currencies are either commodity asset-backed or foreign reserve-backed,” he said.
However, the RBZ devised a varying but justified background against which the coins are backed, and as clearly as the name says, the coins are backed by a US$50 million bond which is a perfect substitute ceteris paribus (all things being equal). That is, save to say, all bonds are classified according to their relative risks.”
Mr Gwenzi said the biggest limitation to the coins is their confinement to Zimbabwe and are, therefore, unable to facilitate international trade.
Some sections have launched spirited attempts to link the coins to the imminent return of the local currency, but both Finance Minister Patrick Chinamasa and Reserve Bank of Zimbabwe boss Dr John Mangudya have repeatedly ruled those claims offside.
For Mr Gwenzi, the local currency will not bounce back in the near future but suggests the return of the Zim dollar could depend on the success or failure of bond coins.
“This is a convenience move; the Government needs a monetary injection and a means that props up its coffers by even a minor one percent, is an achievement. Of course, the success of the (system) is likely to be used as a barometer for the reintroduction of the Zimdollar.
“The success or failure will advise Government on the way forward (but) these are obviously salient features of the deal that will never be communicated to the public.”
