RBZ decries low uptake of smaller ZiG denominations

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By Alois Vinga

THE Reserve Bank of Zimbabwe (RBZ) has bemoaned the low levels of smaller denominations withdrawals by corporates and individuals prompting the ongoing critical shortages of change in the markets.

On April 5, the Reserve Bank of Zimbabwe introduced a new “structured currency” known as Zimbabwe Gold (ZiG) to tackle the ongoing economic crisis in the country. The new currency is backed by gold, and other precious minerals, and will circulate alongside other foreign currencies.

The ZiG currency is currently trading at a rate of 13:56 against US$1 although premiums are slightly higher on the alternative market.

Since its inception, the markets have experienced serious change shortages in a development which experts fear is likely to escalate speculation and non-acceptance of the local currency.

But in an update this week, RBZ Governor John Mushayavanhu said adequate smaller denominations have since been deposited with various banking institutions across the country with setbacks being triggered by low demand.

The RBZ said lower denominations such as the ZiG1, ZiG2 and ZiG5 were issued in quantities sufficient to meet demand for small denominations for change over and above the issuance of  ZiG10 and ZiG20 notes in adequate quantities consistent with the optimal currency issuance ratios.

“The Bank has noted a breakdown in the cash transmission mechanism as evidenced by the low level of ZiG coin withdrawals from commercial banks and therefore encourages both corporates and individuals to approach their banks and withdraw coins for their transactional convenience,” said Mushayavanhu.

The apex bank also reaffirmed  its unwavering commitment to ensuring the public’s convenience by providing adequate cash and also assured the efficiency, safety and soundness of the national payments system, which is well suited to support electronic means of payment.

“In line with our efforts to promote a cash lite economy , we encourage the usage of electronic means of payment , as digital financial services are a key enabler for financial inclusion. The Reserve Bank will continue to engage commercial banks and leverage their branch network to ensure an efficient and effective supply of currency in the economy,” added Mushayavanhu.