While the debates wage in many countries about how much longer cash will be king, in Zimbabwe they have a bit of a different issue.
There is a lack of cash available.
With many ATMs out of cash, banks have long lines and there are limits on how much cash can actually be taken out. And it’s taking a hit on the local economy as a result.
Interestingly enough, Zimbabwe has been using the U.S. dollar since 2009, but there is now a shortage, causing people to hoard their cash or smuggle it in from outside in order to protect themselves. This is leaving many of its residents unable to get enough cash to pay their regular bills.
And that’s where a new solution is coming into play: bond notes.
Under a new plan from Zimbabwe’s central bank, they are trying to introduce a version of their own type of dollar called Ersatz Dollars that act as bank notes in the denomination of $2, $5, $10 and $20. The bank will print $200 million in order to protect the dollar’s dollars.
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But this plan isn’t popular with everyone. There has been opposition from economists, and politicians who worry this move is a plan from President Robert Mugabe’s team to bring a new currency into the country in order to ditch the U.S. dollar. What could happen, critics argue, is similar to when the government printed too much money, causing inflation issues and rendering the money nearly worthless.
That’s why the government then switched to the U.S. dollar. But now, government officials are pushing its people to support the move for the bank bond notes, which could be in circulation within the next few months. The money will only be accepted in Zimbabwe, so it’s a bit unclear how this move would actually help avoid the problems of the past.
