Think Tank Advises Govt To Form A Currency Board

International think tank, Invictus Securities has advised the government which wins the July 30 harmonised elections to establish a currency board in order to restore confidence in the financial system. In its review of the first half of 2018, Invictus Securities says,

Given the breakdown in trust and confidence in the RBZ during the Zimbabwe dollar era, a solution would be to replace the RBZ with a currency board, which will issue notes and coins with its monetary liabilities backed by a foreign reserve currency (the anchor currency) which will be freely tradable at a fixed rate on demand.

The currency board will hold reserves equal to 100 percent or more of the notes and coins in circulation. The main distinction between the currency board and the central bank is that a typical central bank can increase or decrease the monetary base at its discretion.

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