Zimbabwean president, Robert Mugabe issued a presidential decree to amend the Reserve Bank Act of Zimbabwe (RBZ) Act, paving way for the use of bond notes in efforts to ease a cash shortage that has hit the struggling African economy since March.
The presidential decree passed on Monday did not however set timelines for the introduction of the bond notes, which will be used as legal tender.
The new notes, described by Mugabe as surrogate money, will begin with small denominations of $2 and $5.
“The Reserve Bank of Zimbabwe will with immediate effect start the process towards issuance of bond notes as legal tender in Zimbabwe. The process will commence with media publicity to inform and raise awareness of the public on the denominations, design, form, material and security features which are used in the bond notes to be introduced,” read a statement from the Ministry of Finance and Economic Development.
Physical smuggling of US dollars that were introduced in 2009 to mitigate against a 500 billion percent inflation that hit the Zimbabwe currency in 2009 also influenced the decision to introduce the bond notes.
Mugabe’s decision to amend Statutory Instrument 133 of 2016 which provides legal framework for the introduction of bond notes as legal tender in the nation however, elicited fear amongst Zimbabweans and investors.
Many citizens fear that the decision will plunge the nation into the hyperinflation, experienced between 2007 and 2009 when most lost trillions of Zimbabwe dollars in savings.
They said they planned to withdraw their money and instead use it to buy things they had not planned for instead of losing it as it happened in the past.
The Reserve Bank of Zimbabwe however, moved to allay the fears, saying that these are short-term measures meant to the nation maintains an investor-friendly environment, News24 reported.
In September, investors who were interested in funding construction of a $54 million bus interchange at a terminus in the capital, Harare shunned the project after the RBZ announced plans for the introduction of bond notes, The Financial Gazette reported.
The opposition also criticized the move, saying that bond notes are not the solution to the nation’s cash crisis, AFP reported.
The nation has been hit by a cash crisis since the beginning of the year. Many banks across the nation capped daily withdrawals to a maximum of $20.
The economic crisis has seen hundreds of Zimbabweans march in the streets over the introduction of bond notes and a high unemployment rate which is about 90 percent.
In July, the nation experienced its biggest shutdown in a decade when Pastor Evan Mawarire rallied citizens to shut down schools, businesses and shops for a whole day, BBC reported.
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