Reserve Bank of Zimbabwe governor John Mangudya revealed that $400 million dollars in the form of bond notes will be printed and drip-fed into the economy to improve liquidity and replace old notes already in circulation.
He said this when he appeared before the Parliamentary Portfolio Committee on Budget and Finance to speak on the impact of Statutory Instrument (SI) 142 of 2019 has had on the economy. Said Mangudya:
SI142 (2019) has removed the multi-currency system (US dollar and rand) and there is a gap in terms of paper money and there is a difference between paper money and currency in that currency is the ZWL$ represented by bond notes, coins and RTGS$.
By printing the ZWL$400 million, we are saying there is a need for an increase in paper money to replace the gap created by non-usage of foreign currency and we are saying the ZWL$400 million will be on a drip-feed basis.
And as we print new money, it will also replace the old dirty notes.
Responding to a question from Bulawayo Central MP Nicola Watson (MDC Alliance) if the printing of more bond notes will not result in recreating the 2008 scenario of worthless banknotes, Finance Minister Mthuli Ncube said:
In 2008, we had fiscal indiscipline and we are far from that as our policies and conditions are different and I do not think we are repeating the same thing.
We are in a far better position than then. I would like to assure you that we are not in 2008 where we had a number of zeroes compared to now. It is about policies and we are in a different policy environment.
the introduction of the new currency is a good move given that it reduces pressure on the demand for the US$ which is quite crucial since the Bond notes were initially pegged to the US$ which inturn caused prices to be controlled by the exchange rate.