RBZ dismisses CZI’s bank run claims

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By Alois Vinga

THE Reserve Bank of Zimbabwe (RBZ) has dismissed claims by captains of industry that the country is experiencing a bank run.

The central bank also said there was no basis to suspend the auction system as advocated for be the Confederation of Zimbabwe Industries (CZI) saying the argument is unmerited.

The CZI, through an engagement paper dated April 23, 2022, argued the economy was experiencing a bank run, which in investment terms refers to simultaneous withdrawals of cash by depositors over fears of looming insolvency.

Among other demands, the industry lobby group said the foreign exchange auction should be suspended until the backlog is cleared and published as such.

CZI said the auction requires independent supervision overseen by the central bank, a chartered accountancy firm and a registered auctioneer.

CZI further said the highest bids must get full allocation within the regulated limits in order to avoid abuses and also called for foreign currency retentions to be financed through the budget while banks must encourage exporters to freely set reserve prices and sell their foreign currency on the auction system.

“High level multi-sectoral meeting that must find a solution for agricultural financing. Banks CEO’s, RBZ, Ministry of Agriculture and Ministry of Finance must be closed in a room in Victoria Falls until they find a solution that removes the burden of funding agriculture on printing money,” CZI demanded.

But in a late Saturday night response to CZI, the rattled RBZ governor John Mangudya described the entire submission as baseless, inspired by rumour and issued hurriedly without due consultation to verify the claims.

“The contents of the said CZI paper and the impressions depicted therein are unfortunate and uncalled for as they have the potential of destabilizing financial markets and economic stability of the country,” Mangudya said.

“For clarity and avoidance of doubt, the bank advises the public that , government and the Bank are committed to an orderly dedolarisation process and hence it is false that a mono-currency is now in place,” he said.

Mangudya said the government and the central bank are committed to an orderly depolarisation process and hence it is false that a mono-currency is now in place as he maintained that the foreign exchange auction remains in place and will not be suspended as doing so will cause shortages of goods in the market and abet inflation.

The governor questioned the rationale behind CZI’s move to hurriedly publish the paper without engaging the central bank to establish the validity of the rumours that motivated the paper while maintaining that the bank’s doors remain open for dialogue and engagement with the industry group.

“The Bank therefore advises that the contents of the CZI paper in question should be disregarded,” he added