Zimbabwe Launches New Currency Amidst Controversy

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Zimbabwe has launched its own currency for the first time since the country’s dollar was abandoned seven years ago amid rampant inflation.

The bond note, which is worth one US dollar is raising fears of a return to the ill-fated local dollar.

The US dollar has been Zimbabwe’s main currency since 2009.

When the introduction of the new notes was first announced in May, it fueled some of the biggest protests in a decade against President Robert Mugabe.

But the government said it was issuing the bond note to tackle a worsening cash shortage.

It hopes the cash substitute, which is legal tender in Zimbabwe but is not valid outside the country, will halt the flow of US dollars going overseas.

Initially, an amount worth $10m is being introduced into circulation in two and five dollar denominations.

Business groups have welcomed the move as a way of boosting economic growth.

However, major opposition parties, workers and civil society groups are planning further protests this week.

And in the run-up to the notes’ release, Zimbabweans queued for hours to withdraw their US dollars amid fears the bond notes would not be able to keep parity.

The Reserve Bank of Zimbabwe has always refrained from referring to the new bond notes as currency.

But For ordinary Zimbabweans, memories of the collapse and demise of the Zimbabwean dollar in 2009, and the hyperinflation that caused its destruction, still rankle.

However, there were few alternatives for the Reserve Bank as the economy is experiencing a chronic shortage of US dollars, which has been the main currency of use for the past seven years.

If the current experiment with bond notes even looks like taking a step backward to the hyperinflation of seven years ago, not only will the economy’s very survival be in jeopardy, so too will the government’s.






     

     

    Zimbabwe’s central bank has assured people the notes’ release will be controlled, including weekly withdrawal limits of $150 worth.

    Under a proposed law, anyone found guilty of defacing the notes could face up to seven years in prison.

    An egg cost 50 billion Zimbabwean dollars in 2008, a loaf of bread cost the same as 12 brand new cars would have cost ten years previously as inflation rates reached 231,000,000%.

    To keep up with the rising prices, a 100 trillion dollar note was issued – enough for a weekly bus ticket – before the Zimbabwean dollar was eventually scrapped in 2009.

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