RBZ introduces larger denomination bearer cheques

By Tichaona Sibanda
17 January 2008

The Reserve Bank of Zimbabwe has introduced the highest denomination banknotes in the world. They say this is an effort to curtail the country’s galloping inflation and cash shortages. Starting on Friday one, five and ten million dollar bearer cheques will be issued.

Reserve Bank Governor Gideon Gono told journalists in Harare on Wednesday that the new denominations would help eliminate the long queues at the bank and ‘free up people to concentrate on gainful productive activities.’ The central bank also announced new withdrawal limits for customers, who can now withdraw Z$500 million daily, up from Z$50 million.

The country has in the last three months faced severe cash shortages, caused by the skyrocketing inflation which the regime has failed to control. The central bank puts the inflation figure at 8,000 percent but economists believe it could be as much as 100,000 percent.

Our Harare correspondent Simon Muchemwa told us that despite the introduction of the new notes, there is speculation prices will start to go up as soon as the new denominations hit the streets.

‘Economists are saying the higher denominations will fuel inflation to new heights. They also doubt cash shortages will stop because a lot of people are now in the informal sector and would be sceptical to deposit their hard earned cash because of previous experiences where they ended up failing to withdraw their monies from the banks,’ Muchemwa said.

He added that business leaders said the move might end the long queues that had become a permanent feature at banks but would not address the causes of the country’s economic slide, which has increased poverty levels and heightened tensions.