The Zimbabwean government reintroduced its
own currency back in June 2019, and had queues of people waiting outside the bank when the
new notes were due to be released in November. After a controversial land reform programme
in the late 1990s, Zimbabwe experienced a sharp agricultural decline. The situation was made worse by a costly participation
in the Congo War in 1998 and sanctions against Robert Mugabe’s government in 2002. Prices began to rise and by the end of 2008,
inflation had reached 79 billion percent a month. Prices in shops would go up several times
a day. Water and power cuts happened often, there
were queues at banks and petrol stations, and severe shortages of food in supermarkets. Because of these issues, Zimbabwe scrapped its own currency in 2009. The country has since relied at various times
on the US dollar, South African rands, as well as other foreign currencies, bond notes and
an electronic currency called the RTGS dollar. In 2016, the government introduced the bond
notes and coins, which were supposed to be equivalent to the US dollar, to make up for
the dollar cash shortage. But no-one had faith that they were equivalent
in value and, on the black market, bond notes lost value against the US dollar. RTGS stands for Real Time Gross Settlement,
a phrase which is familiar to Zimbabweans who have been using them to describe money
that has been electronically transferred into their bank accounts. The issue with using foreign currencies is
that they each have a different exchange rate, meaning that customers were sometimes charged
different prices depending on what they were paying with – so the central bank banned
their use in June 2019. The RTGS dollar was supposed to bring together
bond notes and debit card and mobile money payments to make sure that they were all worth
the same. The government eventually gave up on the idea
that bond notes and US dollars have the same value, saying that the value of the RTGS dollar
would be set by the market. Zimbabwe’s central bank hopes the new notes
will ease a severe cash shortage as the country suffers a deepening economic crisis. The bank has played down fears that the move
will fuel further inflation, even though inflation is thought to currently be about 300%. The Reserve Bank of Zimbabwe insists that
the two- and five-Zimbabwe dollar notes will not increase overall money supply. The cash is supposed to replace money that
was stored electronically. Well, let’s have
a look… I don’t think it is going to change much. If they reintroduce the rands, you know, I think it will be better.