eBusiness Weekly
Business Writer
The Reserve Bank of Zimbabwe is set to introduce $100 bills to improve convenience to the economy after smaller denominations were rendered unusable by inflation.
According to a Government Gazette issue of April 5, 2022, the monetary authorities are introducing the $100 note in terms of section 40 (3) of the RBZ Act (Chapter 22:15).
“The Minister of Finance and Economic Development has hereby, in terms of section 40(3) of the Reserve Bank of Zimbabwe Act [Chapter 22:15], made the following notice specifying the matters determined by the President in terms of subsection (2) of that section:—
“This notice may be cited as the Reserve Bank of Zimbabwe (Issue of One Hundred Dollar Banknote) Notice, 2022.
“There shall be issued, in terms of the Act, a hundred-dollar banknote,” it said.
On the front side of the $100 banknote, shall be the logo of the RBZ (three balancing rocks), with the visually impaired recognition feature to the left, latent image showing the denomination, windowed security strip inscribed “RBZ” with colour shift from red to green.
In addition, there shall be a watermark with highlighted inscription “RBZ” and see-through of Zimbabwe Bird looking to the left in perfect register, as secondary features.
On the back side there shall be an impression of Great Zimbabwe monument and the baobab tree, gold-coloured iridescent band showing the denomination of the note and see-through of the Zimbabwe Bird looking to the right.
The $100 banknote measuring 156mm by 66mm shall be brown in colour.
An economic analyst, Professor Gift Mugano, said the rationale behind introducing a higher denomination banknote is based on the prevailing inflationary pressures that have eroded the value of money.
“The rationale behind the introduction of the $100 banknote is based on the inflationary pressures which are eroding the value of money causing the transacting public to carry huge volumes of cash; so the $100 note will be accommodative in that money should be convenient to the public.
“The impact of this will be significant in that the authorities are not printing more money but replacing the bond notes with the Zimbabwe dollar,” he said.
Presently, the highest denomination is a $50 note which is in circulation alongside $20, $10, $5 and $2.
While the intention of the monetary authorities will be to bring convenience to the transacting public, Prof Mugano said the intended objective would be rendered useless by counter-productive elements.
“I would agree with the Reserve Bank Governor (Dr John Mangudya) when he says this inflation is driven by behavioural changes.
“So, as the $100 note is introduced the behaviour out there in the market changes, there is a tendency of raising prices when a new note of higher denomination is introduced. When that happens, the intention by the authorities becomes null and void,” he said, adding that this was because people do not have confidence with the local financial system.
Prof Mugano said he believes the introduction of the $100 note should be the last until the economy goes into a single digit inflation.
He said what is significant at the moment was for the monetary authorities to stabilise the gap between the official exchange rate and parallel market.
This, Prof Mugano should be done through adopting a market-based economy where the commodity exchange becomes pivotal in the trading of commodities such as maize through an auction arrangement.
An economic commentator Trust Chikohora said the introduction of the $100 note is being compounded by inflationary pressures.
“It was now difficult for people to do significant transaction with the lower denominations such as the $50 note currently in circulation, this is on account that the cost of living in local currency terms has been going up.
“If we have high denominations, it will improve convenience to the transacting public. Inflation itself, has of late been caused by the loss of value of local currency against the US dollar. Given that most of the transaction in the economy are being done electronically using platforms such as EcoCash, swipe and so forth,” he said.
“We don’t expect that the introduction of a $100 note will fuel inflation. The issue at stake is for the authorities to deal with issues of money supply of which I don’t think they will print more money beyond their money growth target.”
“It is also imperative that even arbitrage issues are dealt with in the economy so as to control inflation.”
Contacted for comment an economist Eddie Cross said the introduction echoed similar sentiments as Chikohora saying the move by the Reserve Bank is well-thought.
“Two years ago, when I was in the Reserve Bank Monetary Policy Committee, it was resolved that the Central Bank introduces local currency in denominations of $2, $5, $10, $50 and $100 note, so the introduction of the $100 note is well-thought.
“The idea is to have more currency available to the transacting public for convenience purposes and its will not cause inflationary pressures,” he said.
