Foreign currency deposits shoot to US$1, 6 billion – RBZ

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By Alois Vinga

FOREIGN currency deposits have increased to a whooping US$1, 6 billion largely attributed to rising confidence in the banking sector stability, Reserve Bank of Zimbabwe (RBZ) has revealed.

In a presentation at the Zimbabwe Independent Banks and Banking Survey Dinner recently, RBZ governor, Dr John Mangudya revealed that the banking sector’s total deposits so far had increased tremendously.

“Confidence in the banking sector improved significantly as depicted by growth in foreign currency deposits from around US$300 million in 2018 to US$ 1, 6 billion as at end of September 2023.

“The banking sector has demonstrated resilience and strong performance with all banking institutions recording profits,” he said.

He said the sector has withstood shocks including COVID-19 and has become even stronger with banking sector performance indicators comparing favourably to international benchmarks.

The central bank governor said financial inclusion at around 84% is quite impressive as he attributed the achievement to digital financial services, including mobile banks.

“Around 95% of local currency transactions in the country are being conducted through electronic payment systems. Mobile transactions account for 80% of the total volume of transactions highlighting its significance in promoting financial inclusion.

“Electronic payment, through RTGS accounts for 80% of total value of transactions,” he said.

He said the National Financial Inclusion Strategy II launched in 2022 is key for fostering inclusive growth employment and poverty reduction consistent with the Government’s aspirations of leaving no one behind.

Mangudya said the current measures to support banking sector resilience and sustainability include; the lender of last resort facility for banking institutions and ensuring an efficient payment system and payment finality as the settlement hub.

He said that frameworks for the smooth functioning of the banking sector and payment systems: Risk-based Supervision and Anti-Money Laundering, Climate Risk Management and cloud computing and Cyber Security are part of the strategies being employed to support the banking sector.

“Fintech and financial inclusion, promoting foreign currency trading through a wholesale foreign currency auction system to drive an active interbank Foreign Exchange market as well as the RBZ’s role in managing a national switch to support interoperability in the financial sector,” added Mangudya.