Currency Board, Structured Currency, Asset-backed Currency Will All Fail - Chamisa
Prominent Zimbabwean opposition politician Nelson Chamisa has said the Government’s plans to establish a currency board and introduce a structured currency are “too little too late”.
Chamisa, who narrowly lost in the 2018 and 2023 presidential elections, said Zimbabwe’s currency crisis is a crisis of confidence.
Posting on social media site X, Chamisa warned that the new plan would fail the same way previous interventions failed due to a lack of confidence.
Chamisa said only genuine comprehensive political and economic reforms that prioritize accountability, transparency, and the rule of law will restore confidence and save the country’s currency. He wrote:
The currency crisis Zimbabwe faces is basically a crisis of CONFIDENCE. This confidence deficit crisis can’t be addressed by setting up a currency board or establishing a structured currency framework.
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This is why previous efforts which include the introduction of bond notes, gold coins and ZIG failed dismally.
Regarding the asset-backed currency, I must express deep scepticism. This strategy is a rehash of previous failed attempts.
The introduction of gold-backed digital coins and gold coins has already proven ineffective, leading to the discounted sale of gold and contributing to the smuggling of precious resources out of our country.
Moreover, the lack of transparency surrounding this process only fuels suspicion and undermines public trust.
As for the proposed currency board, my assessment of where this has happened successfully shows that the success hinges on accountability, transparency, and adherence to legal instruments—qualities sorely lacking in Zimbabwe’s current governance.
The pervasive state policy inconsistency erodes confidence in the system’s integrity. Without these critical success factors in place, the currency board is doomed to fail.
For the avoidance of doubt, I know that currency boards have been used in over 38 countries with notable success because of the “confidence effect”, especially in circumstances where credible people of integrity and high standing were appointed to the board.
I am also aware that currency boards work well in circumstances where the central bank holds sufficient foreign which will match the demand for foreign currency at a pegged exchange rate.
Our situation is so dire because it is characterized by a confidence deficit, and exogenous shocks (drought & subdued commodity prices) which have a net effect of depleting our forex and will weaken the effectiveness of the so–called structured currency and currency board.
It’s clear that the they are resorting to ineffective fiscal and monetary policies as the economy continues to suffer from currency leakage and a lack of value generation, exacerbated by the refusal to implement a single currency status and abandon the flawed interchange auction system.
Instead of tinkering with ineffective superficial solutions, Zimbabwe needs genuine comprehensive political and economic reforms that prioritize accountability, transparency, and the rule of law. Only then can we build a stable and prosperous economy for everyone.
More: Pindula News
