A certain CABS customer logged into their account today like they always do, to check on them incomings and whatnot. There was the familiar ‘Good afternoon’ and ‘Welcome back.’ All was well. However, upon closer inspection they realised something strange, something that was not there before.
Instead of going straight into the balances on the customer’s account, CABS had introduced two new subheadings. The first subheading being Local Currency Accounts and the second being Foreign Currency Accounts and what do you know, their account was listed under the Local Currency Accounts.
Now that is strange. If we remember correctly these accounts we have are foreign currency accounts. Last time we checked, the bond note was not currency but rather just legal tender near money, pegged equally against the US dollar (yes, that is how the RBZ put it.) If there is no local currency in Zimbabwe, what do they mean by Local Currency Account? Do they know something we don’t know?
The strange part is that although CABS lists the customer’s account under Local Currency Accounts, the currency is listed as USD. Now, there is a lot we don’t know but the US dollar is not a Zimbabwean local currency. Of that we can be sure. Could this be their way of trying to split bond note accounts and foreign currency accounts (USD included) in the future?
It certainly seems so. We might try all we want to maintain that the bond note be pegged equally against the USD but that is futile as the law of demand and supply has already done its work. This discrepancy between the official value of the bond note and the one on the market has led to all sorts of problems. It seems that unofficially banks are keeping two accounts for each of us, one for bond notes and one for real money. Of course no bank is going to confirm this.
They won’t confirm it but let’s consider this, for you to use your Mastercard or Visa to purchase outside Zimbabwe you have to fund it using US dollars. Now wait a minute. If I have just one account with them, which already is a US dollar account (like the CABS one mentioned), how come they need US dollars from me to fund my Mastercard? How do they then know which US dollars were already in my account and which US dollars I put in to fund my Mastercard unless they are keeping two accounts for me?
What do you think about CABS listing two currency accounts? What do you think that is all about? Do they mean ‘main currency,’ as in the one most used in this country, when they say local currency? Let us know what you think in the comments below.
Central Africa Building Society (CABS) is the largest building society in Zimbabwe. CABS is a subsidiary of Old Mutual Zimbabwe Limited, Zimbabwe's largest life assurance organization. Old Mutual Zimbabwe is in turn a subsidiary of Old Mutual PLC - an international financial services conglomerate. The... Read More About CABS
Bond Notes are a currency of notes backed by a bond that the Zimbabwe government announced on 4 May 2016 by Reserve Bank of Zimbabwe (RBZ) governor John Mangudya. The $2 denomination of the notes was finally introduced on 28 November 2016. More notes were... Read More About Bond Notes
The Reserve Bank of Zimbabwe (RBZ) is the central bank of Zimbabwe. Its offices are located at number 80 Samora Machel Avenue in Harare. The Reserve Bank of Zimbabwe operates under the Reserve Bank of Zimbabwe Act, Chapter 22: 15 of 1964. The Act provides... Read More About RBZ