The purpose of this press conference is to unveil the bond coins to the public in line with the announcement that the Reserve Bank of Zimbabwe made in the Monetary Policy Statement in August 2014.
The bond coins are going to be issued in denominations of 1c, 5c, 10c, 25c and 50c. The 50c coins shall be released into the market in March 2015 due to the prerequisite security features needed in the design and manufacture of this coin.
The economics of the bond coins is that they are being introduced to buttress the multiple currency system through the provision of change especially for the US$ notes which have a smallest denomination in circulation in Zimbabwe of US$1.
The Reserve Bank is therefore addressing the divisibility and store of value qualities of money through this initiative which has already received significant support from the Consumer Council of Zimbabwe, business organisations and
financial institutions.
The bond coins would be at par with the US cents i.e. trading one for one with US cents. This is necessary to complete the divisibility series of the US$ for the benefit of both consumers and businesses.
Our expectation is that the introduction of bond coins would necessitate correct pricing for goods and services which hitherto was constrained by the absence of an appropriate system of coins. These coins shall therefore go a long way in mitigating the country’s lopsided pricing structure for the convenience of consumers.
The bond coins derive their name from the US$50 million bond coin facility that the Reserve Bank arranged for the purpose of providing the coins with intrinsic value. The bond coins would therefore be a good store of value.
Consumers and businesses would be able to exchange the coins for paper money at their banks. The initial amount to be made available is US$10 million worth of bond coins to be released into the market between December and March 2015. This translates to just below 2% of total bank deposits. Under normal circumstances, the proportion of coins to money in circulation in an economy is between 20 to 25%. However due to the fact that Zimbabwe is using multiple currencies, we envisage the bond coins to remain below 10% of total bank deposits.
For transparency and accountability purposes, the Reserve Bank shall ensure that the whole process is subject to public scrutiny and that both the value and quantity of bond coins in circulation are subject to audit by reputable institutions. We have already engaged and appraised the Institute of Chartered Accountants of Zimbabwe in this
regard.
The bond coins shall be distributed to the public through normal banking channels and shall be in circulation starting 18 December 2014. Their circulation is limited to Zimbabwe.
11 Replies to “FULL TEXT: Zimbabwe’s New Coins And Why They Are Essential; By RBZ Boss Dr J P Mangudya”
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thats soo true man u are very right its a pitty that these guyz are not up to date with information…. common is not so common hahahahah….blessmore the great i 2nd you lets be pro active
shaka mambo sometimes its good to be pro active and not reacting ….if u really had an idea to ease the situation why not write your proposal and snd it to RBZ…..its a fact that zimbabwe went so down that no one wants it to go down again bt only to rise up…Mugabe and his team will never dare try to print money the coins rather cause they saw and experienced the circumstances…..i believe this is the time for new things lets wait and see how it goes n i knw mangudya is very learned and so many economists have been involved (one from Africa University called Masese his a guru in economics and money and banking and capital markets) in trying to see if the introduction of coins would help and i knw these guyz are not dumb ….lets be pro active mashaka…
Guys u r missing the point. These bond coins have a backing of USD reserve so it has value… can just stop being pessimistic for once and join those who are serious about building our nation.
Then soon we may have bonded $3, $7, $15,$25 and even $500 coins. To a common man in the street, if someone has got $1000 in notes and is looking for coins he can just go to the guy he knows has such coins for exchange. Is it legally impossible to purchase such coins from wherever they can be obtained. This is obviously bringing back the zim dollar back door. Very soon we will have more of these coins and less of notes as those connected with the manufacture of the coins will be busy buying the notes in circulation…kkkkkkkkk.
So they cam now start increasing prices slowly but surely by coins! It is now easy to sell a loaf of bread at $1.05, coke can go up from R5 to 55c. People have forgotten, what Zimbabwean businesses want is protection by government from external competitors. Protected, they then collude to increase prices. Look, why is there traditionally no 1 litre of cooking oil? Because they can sell 750ml at the price of 1 litre!
You have that one spot on!
I agree, it is a matter of time before we are back to the nightmare of hyper inflation again!
This is a slippery slope. Everyone knows Mugabe is desperate for money and has been struggling to get enough to pay civil servant wages let alone anything else. The temptation for him to bridge the ever increasing gap between collected revenue and expenditure by printing more money is simply irresistible for him.
All the measures taken to ensure the coins keep their value will soon be discarded just as the regime has discarded the law, its promise to the nation, etc.
So they are now trying to find a way to start prinitng valueless, actually useless money again. Extraordinary circumstances will require extraordinary measures, munonyadzisa
Banana republic continued, the governor of the reserve bank an educated man is not even embarrassed to sit there and not call these coins Zimbabwe coins for which they are. They are minted by authority only of the republic of Zimbabwe and are used only in Zimbabwe, so basically they are Zimbabwe coins, permanent coins so what is with all this bond nonsense. They have avoided the 50 cent and the dollar for now because that would mean we would have a dollar value to this coins which would effectively mean the Zimbabwe dollar is back through the back door. He is trying to justify these Zim cents by saying the amount is little and that their minting would be scrutinised but he has not sought a proper legislative tool through parliament for the regulation of the amount of these coins minted and put into circulation. What this means is that if Mugabe orders Mangudya to print more unnecessary coins to pay salaries for civil servants for example, there will be nothing legal to stop the rot which reduced the old Zim dollar to toilet paper. This is a very bad move which is being painted as a humanitarian move meant to ease the lives of ordinary Zimbabwean when there are other better monetary means which can be adopted.
No need for 1c coins; too expensive to make and no one will really need them.You should have made 5c; 10c and 50c only you poor bastards.