President Emmerson Mnangagwa has been told to print more bond notes so to fix the ongoing cash crisis.

The Confederation of Zimbabwe Industries (CZI) has told the President to print more bond notes to solve the cash crisis while placing a limit on the amount of money released through the Real Time Gross Settlement (RTGS) system.

The CZI says the RTGS platform is fuelling inflation and causing price instability.

The plan handed Mnangagwa on the 11th of December 2017, reads in part:

What the sterilisation programme outlined above achieves is a de facto cap on overall money supply. The benefit of a cap cannot be overstated. This becomes the source of market confidence. While there has been growth on RTGS, the real value of the RTGS has gone down significantly. While the value of the bond has declined, it has not declined at the rate of decline of the value of the RTGS because the bond has been capped.

So what we are recommending specifically is that the cap on bond is replaced by a cap on RTGS PLUS bond and that enough bond is then released to meet the cash requirements in the economy. This solves the problem of the shortage of cash as a medium of exchange in the economy.

As people withdraw bond from the banks, this will reduce the RTGS balances, further tightening monetary policy as when the bond is in someone’s pocket the money multiplier impact is not felt. In other words, cash money is much less inflationary than electronic money. – Fingaz