Zimbabwe is introducing a new currency in the next two weeks, according to several media outlets. The new currency targets the liquidity shortages in the Southern African country, giving the central bank monetary policy control after years of using foreign currencies. The yet-to-be-named currency will be denominated in coins and notes, with the maximum value being $0.25.
Speaking to journalists, Reserve Bank of Zimbabwe Governor John Mangudya said the decision to release the new currency was arrived at by the regulator’s monetary policy committee. He stated, “The committee felt there was a need to boost the domestic availability of cash in the economy for transactional purposes through a gradual increase in cash supply over the next six months.”
This is the latest twist in a country that has struggled quite a bit with its currency standards. Zimbabwe abandoned the use of its Zimbabwean dollar a decade ago after recording massive inflation which effectively devalued its currency. It then turned to foreign currencies such as the U.S. dollar, the Australian dollar, the sterling pound and the euro. This gave the country some stability, but it was short-lived, as the use of foreign currency was outlawed earlier this year.
This year, Zimbabwe has had a unique challenge: the lack of physical cash. According to local media outlets, most ATMs in the country no longer dispense cash. This is the problem that the new currency is out to solve.
And if you’re thinking that the printing of money could cause inflation, the governor clarified, “There is a misconception that once you introduce a currency, then inflation is going to increase. We are simply giving people a chance to choose between electronic balances and cash.”
Experts believe that this new currency will fail,