RESERVE Bank of Zimbabwe (RBZ) governor John Mangudya says the central bank will soon be introducing a $50 note to augment the current stock of notes in circulation.
In his Monetary Policy Statement delivered yesterday, Mangudya said the introduction of the new bank notes would not cause inflation, meaning the relative price stability currently prevailing in the country will continue.
With Zimbabwe expected to have a bumper harvest this year, the central bank chief also expected agriculture to solidify this current stability.
“As previously advised, the bank shall soon be introducing a $50 banknote to augment the current stock of banknotes in circulation. The bank reiterates that banknotes, new or old, do not cause inflation in an economy since they do not increase money supply.
“Cash payments are an alternative to other methods of transacting and do not constitute money creation. Price dynamics are influenced by the level of money supply in an economy as opposed to its composition (electronic money, transfers, cash, etc.), hence the bank’s firm commitment to keeping the level of money supply growth under control through its conservative or hawkish monetary targeting framework,” Mangudya said.
Withdrawal limits for individuals have been increased to $2 000 per week, up from $1 000 while the daily transfer cap for mobile money transactions remains at $5 000.
“This measure will enable the transacting public to continue conducting small transactions using cash, whilst large transactions are conducted through electronic banking,” the RBZ chief said.
Turning to inflation, Mangudya said it has been on a downward trajectory since the second half of 2020 due to strong monetary policy measures which kept reserve money growth under check and improved efficiency in the allocation of foreign currency through the foreign exchange auction system.
“Coupled with increased food production due to a favourable agriculture season, inflationary pressures are expected to remain subdued in the short to medium term. “This inflation path will be underpinned by a targeted month-onmonth inflation rate of below three percent,” he added.
Mangudya said the central bank’s focus on fostering price and financial system stability requires team effort by all Zimbabweans to enhance selfdiscipline and compliance. “The Bank’s Exchange Control Inspectorate and the Financial Intelligence Unit (FIU) have enhanced their monitoring and surveillance on the utilisation of foreign exchange in the market to foster market discipline.
“Banks and mobile banking institutions are obliged to ensure that the Know Your Customer (KYC) and Customer Due Diligence (CDD) principles are complied with at all the times,” he added.
The central bank chief said enhancing the FIU would ensure that authorised dealers or banks and foreign exchange auction system participants comply with auction rules and regulations to curb abuse of the foreign exchange auction and safeguard the auction from “being abused as a breeding ground for arbitrage opportunities”.
The foreign currency auction was introduced in June last year to end the foreign exchange black market and ensure vailability of hard currency to industry and commerce.
-Daily News