The Reserve Bank of Zimbabwe (RBZ) has made the decision to postpone putting the new ZiG50 and ZiG200 banknotes into circulation due to worries that the higher denominations might worsen the country’s already high inflation rates. John Mushayavanhu, the governor of the central bank, made this declaration at the annual convention of the Chamber of Mines of Zimbabwe in Victoria Falls in 2024.
The governor went on to explain that a cautious approach to releasing higher-value notes has been inspired by the state of the economy at the moment and the stable performance of the recently adopted ZiG currency versus the US dollar. “Because larger denominations are perceived as inflating on a psychological level, we have been quite cautious about adopting them. We do not think there is much of a need to introduce the ZiG50 and ZiG200. We have printed them and we have them. but it will take a bit of time before we put them on the market,” Mushayavanhu explained.
Since its introduction in April of this year, the ZiG currency has included denominations such as ZiG1, ZiG2, ZiG5, ZiG10, and ZiG20, which are currently in circulation. The focus, according to Mushayavanhu, has been on smaller denominations to address the frequent problem of inadequate change, which affects daily transactions across various sectors.
“Since we introduced the ZiG, the economy has continued to grow across all sectors and we have not seen any negative results or disruptions,” the governor noted. He further highlighted that the introduction of the ZiG has contributed to a fair degree of economic stability, with the currency even strengthening against the US dollar.
Nevertheless, despite the governor’s encouraging words, a recent poll conducted by The Standard revealed that there have been noticeable shortages of the ZiG notes in circulation. This scarcity has severely disrupted everyday activities and commercial operations in a number of sectors, including supermarkets, the informal market, transportation, and grocery stores. The survey highlights a gap between the central bank’s optimistic assessment of the economy and the real problems with cash availability that both the general population and businesses are facing.
Delaying the distribution of bigger denomination notes is part of the RBZ’s attempt to contain inflation, which has been a recurring problem throughout Zimbabwe’s economic history. The Reserve Bank of Zimbabwe (RBZ) hopes to prevent an adverse mental impact that could result in increased prices and further inflation.
