The Reserve Bank of Zimbabwe (RBZ) is considering the introduction of higher denomination ZiG notes to facilitate smoother cash transactions.
RBZ Governor John Mushayavanhu told <a href="https://www.sundaymail.co.zw/zig-firms-as-rbz-reserves-shoot-to-us533m">The Sunday Mail</a> that the volume of new notes set will be drip-fed into the market to align with projected economic activity, ensuring market stability. Said Mushayavanhu:
<blockquote>
Plans to introduce higher denominations are underway and the amount to be introduced will be optimal and consistent with the envisaged economic activity.
Going forward, the Reserve Bank expects to progressively increase the proportion of cash to total deposits to 5 percent, which is close to countries with similar economic structures in the region.
Given the current money market position, the Reserve Bank is committed to maintaining the value of the ZiG and implementing measures that will preserve its transactional and store-of-value functions and support the de-dollarisation journey.
The RBZ will progressively increase the amount of ZiG in circulation to optimal levels, consistent with anticipated broad money growth supportive of economic activity.
The RBZ will ensure that the increase in local currency is fully covered by foreign reserves (gold, other precious metals and nostro balances), at all times, and in line with the foreign reserves accumulation strategy.
</blockquote>
While the RBZ asserts that the ZiG has stabilized, trading at just over ZiG26 per US$1 on Monday, January 13, the street rate remains around ZiG40 per US$1.
Additionally, formal retail outlets have moved away from using the fixed official rate. When they do, they tend to inflate prices in USD to protect themselves from potential losses.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

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The Reserve Bank of Zimbabwe wants to make it easier to use money by introducing higher denomination notes. The amount of new money introduced will depend on the economy, to keep things stable. They plan to increase the amount of cash in circulation gradually. The value of the local currency (ZiG) needs to be protected, and the RBZ will make sure there's enough foreign reserves to back it up. The ZiG is doing better but the street rate is still different. Stores are moving away from using official rates and some are raising prices in USD.

RBZ Plans To Introduce Higher Denomination ZiG Notes

Retailers have pledged to approach banks to get ZiG coins and small-denomination notes to help resolve the shortage of small change, reported <a href="https://www.herald.co.zw/retailers-pledge-to-address-change-shortages/">The Herald</a>.
On Tuesday, Reserve Bank of Zimbabwe (RBZ) Governor, John Mushayavanhu, met wholesalers and retailers in Harare to discuss issues affecting the economy.
During the meeting, CZR president Denford Mutashu said the retail sector had embraced the ZiG more than any other sector in the economy but the dominance of the US dollar is negatively affecting them. He said:
<blockquote>
Unfortunately, at the procurement level, 80 per cent is US dollars and 20 per cent is ZiG, so that is a glitch in the market because it is affecting day-to-day procurement patterns of formal channel retailers and wholesalers… and it is the informal market, which is currently enjoying the benefits of having not formalised their business.
We are quite happy with this dialogue because the Governor agreed to meet retailers and wholesalers and that is actually in line with the President’s engagement and re-engagement dialogue.
On the issue of change that we are currently experiencing, as the Governor has highlighted, we are going to approach the banks to address this.
</blockquote>
Mushayavanhu acknowledged that the Reserve Bank had received reports of consumers failing to get change from shops. He said:
<blockquote>
We are getting complaints that people are coming and they buy something for US$1,50 and instead of you giving them 50 cents change, you are asking them to add a bottle of water, which they don’t need.
I did say yesterday when I met the transport operators, that as we speak right now, we have got ZiG55 million in circulation.
This is more than the amount that was in circulation when we had bond notes. We have issued ZiG1, ZiG2, ZiG5 coins and ZiG10 and ZiG20 notes.
The question I want to ask you is: ‘Have you gone to your bank and said I want a float in change,’ because my knowledge of supermarkets is that you should have a float.
Have you gone to your bank and said I want ZiG100 000 in ZiG1, ZiG2, ZiG5 and they said they don’t have it because I have evidence that they are sitting on ZiG coins for which there are no takers?
So, who is not telling the correct story there? Have we gone to the banks and they said they haven’t got it?
Let us know, we can intervene and say, which is your bank and will give your bank exactly the ZiG coins that you want.
</blockquote>
The issue of change has also affected the transport sector, with passengers on 50c routes forced to pay US$1 or being paired up with strangers who would have paid US$1 and have to buy snacks from street vendors.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

Retailers Pledge To Deal With Change Shortages

The Reserve Bank of Zimbabwe (RBZ) has ruled out introducing ZiG50 and ZiG200 to the market anytime soon over fears the bigger notes will fuel inflation.
Speaking during a Chamber of Mines of Zimbabwe 2024 annual conference held in Victoria Falls on Thursday, RBZ governor John Mushayavanhu said the central bank would rather introduce more of the smaller denominations to address the shortage of change. Said Mushayavanhu (via <a href="https://www.newsday.co.zw/local-news/article/200027606/rbz-holds-zig50-zig200-from-circulation">NewsDay</a>):
<blockquote>
Since we introduced the ZiG, the economy has continued to grow across all sectors and we have not seen any negative results or disruptions.
We have introduced most of the cash denominations that we said we were going to. We have got ZiG1, ZiG2, ZiG5, ZiG10 and ZiG20 in circulation now.
We are going to put more of the smaller denominations because we want to make sure that the problem of change is immediately alleviated.
We have been very shy when it comes to introducing bigger denominations because psychologically, these denominations are inflationary. We do not see a reason to introduce the ZiG50 or ZiG200.
We have them, we have printed them, but it will take a bit of time before we put them on the market.
</blockquote>
ZiG notes and coins remain scarce in the market because they are not readily available through banks. These shortages are hurting various sectors, including transport, supermarkets, and the informal market.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

RBZ Holds Onto ZiG50 And ZiG200 Notes

The severe scarcity of ZiG banknotes and coins in circulation can be attributed to the Reserve Bank of Zimbabwe’s (RBZ) reluctance to distribute the new currency en masse over concerns that releasing the notes and coins all at once could inadvertently fuel the growth of the parallel market, it has emerged.
The government launched the ZiG on 05 April 2024, in an attempt to stabilise the economy, which has been unstable for the past 25 years.
The gold-backed currency replaced the Zimbabwean dollar, the RTGS, which had lost three-quarters of its value in the year it was replaced.
The new ZiG banknotes and coins that came into circulation on 30 April are in denominations of between 1 and 200.
However, the ZiG physical cash remains in short supply and this has significantly impacted millions who depend on cash for their daily needs, including people working in the informal economy.
The situation has led to many Zimbabweans having to budget more for basics just to make it through the day.
Speaking at a breakfast meeting hosted by the Zimbabwe Economics Society in Harare, RBZ deputy governor Innocent Matshe said the central bank deliberately limited the amount of cash injected into the economy to starve the parallel market. He said (via <a href="https://www.newsday.co.zw/business/article/200027220/zim-applies-for-iso-code-for-zig">NewsDay</a>):
<blockquote>
Due to the situation in our country, where a parallel market drove approximately 80% of economic activities, it was crucial to ensure that we did not supply all the new currency at once. Therefore, we limited the amount of cash injected into the economy.
Although challenges persist, they will evolve. Most financial institutions have received sufficient small denominations of the currency to address these issues.
You may wonder, why issues persist. These issues are systemic but will be resolved as the currency becomes more widely available.
The stability of the exchange rate will reflect the true value of the economy and the purchasing power of the currency, boosting domestic demand and supporting industrialisation in trade.
</blockquote>
The ZiG will co-circulate with other foreign currencies in the economy. However, the US dollar, which accounts for over 80 of transactions, will remain legal tender.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

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