Minister of Finance and Economic Development Mthuli Ncube has admitted that the United States Dollar is not equal to the Bond Note or the Real Time Gross Settlement (RTGS) electronic dollars. This is in stark contrast to Reserve Bank of Zimbabwe (RBZ) governor John Mangudya who insisted that the money is at par despite the fact that he ordered banks to separate bank accounts into Nostro Foreign Currency Accounts (FCAs) and RTGS FCAs. In his presentation at the United Kingdom think tank Chatham House on Monday, Ncube said,
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The market is setting the pace. What is left for us is choreography and management of the economic fundamentals. The economy has dollarised. RTGS [real time gross settlement] balances are over $6 billion. The market is doing everything, we are going through a transition. The market has said these currencies [US dollar and bond notes] are not at par. I don’t want to argue with the market. The bond notes will, at some point, have to be demonetised and I cannot tell you (when that will be).
Mangudya, on the other hand, has insisted that the RTGS FCA will remain linked to the Nostro FCA and has described any move to let the market determine exchange rates as economic suicide. Said Mangudyya,
…Let me repeat, it would be economic suicide for this economy if the Government of Zimbabwe was to do that (free-float exchange rates). That would mean overnight, people will offload their RTGS balances and purchase the little foreign currency that is on the market…By doing so, it will be inflationary and you are going to ask for higher salaries and at the end of the day, we will have spillover effects.
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Professor Mthuli Ncube is the Minister of Finance and Economic Development. He was the Chief Economist and Vice President of the African Development Bank, financial, economics, investment, and public policy expert, entrepreneur and academic. Professor Ncube divides his time between the private sector in Switzerland... Read More About Mthuli Ncube
John Panonetsa Mangudya is an economist and the current Reserve Bank of Zimbabwe governor. Mangudya, who sits on many local and international boards .He was made RBZ governor after the expiry of Gideon Gono's term in 2014. He had been CBZ Holdings Ltd Chief Executive... Read More About John Mangudya
Bond Notes are a currency of notes backed by a bond that the Zimbabwe government announced on 4 May 2016 by Reserve Bank of Zimbabwe (RBZ) governor John Mangudya. The $2 denomination of the notes was finally introduced on 28 November 2016. More notes were... Read More About Bond Notes