In a report by the Sunday News, Eddie Cross a member of the Monetary Policy Committee (MPC) has said that Zimbabwe we will be getting ZWL$50, 100 and 200 banknotes.
“The only new note which is due to come in shortly is the $50 note and I’m not certain when that is going to be available but it is in the process of preparation. There are already plans to introduce some higher denomination notes this year.
Some time ago we made a decision in the MPC to introduce new $200, $100 and $50 dollar notes. I understand that this is being dealt with by the Governor working with the President because the President has to approve the designs and everything else.
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But I understand that the $50 note will be available early in the New Year.”Eddie Cross via Sunday News
So why is this finally happening…
The RBZ’s hand was forced because of the runaway inflation that has caused prices to increase which quickly diminished the utility of the ZWL$2, 5, 10 and 20 notes. To say quickly diminish is a little bit of an understatement because if you wanted to buy anything in ZWL$ banknotes you would need to carry a bag full of them.
Higher domination notes are also being introduced in order to reduce bank queues. However, Edgar Muhoyi, a lecturer in the Department of Economics at the University of Zimbabwe says that the RBZ should look into increasing withdrawal limits:
“The other thing the RBZ should look at when they introduce these higher denomination notes is to increase the individual withdrawal limits so that one does not need to go to the bank regularly.”
He also went on to remark on the cash shortages saying that it isn’t all to do with higher demonination notes but more about the physical cash in the economy.
“Money supply in the market has not been adequate and this will not be addressed by injecting higher denomination notes. This can only be addressed by the quantity of money in the economy.
The RBZ should inject a proportion of money which is equivalent to a certain percentage of the country’s Gross Domestic Product into the economy and this will be a better way of addressing the cash shortages.”
A little too late?
As mentioned before, if you wanted to buy in ZWL$ cash then you would have to carry a lot of money to do so. The inconvenience of that forced many Zimbabweans to use electronic money (local currency accounts and mobile money) or US$ to transact. Even with the introduction of higher denomination banknotes, I don’t see many departing from using electronic money or US$.
This is made worse because we are reportedly being drip-fed these notes starting with the ZWL$50.00. Looking at the price of bread, for example (ZWL$77.49), that banknote is far below its value. And by the time the rest come out, they may have missed the window where they could have been useful.