Cloak and dagger surround Zimbabwe bond coins|
November 15, 2017
The cash-strapped African nation of Zimbabwe just injected another $3 million in “bond coins” into its economy, but the import of the coins has caused quite a commotion.
Bond bank notes and coins of questionable value only being accepted with extreme reserve have been circulated by the Reserve Bank of Zimbabwe since late 2014. The 1-, 5-, 10-, 25- and 50-cent and $1 bond coins were issued officially due to a lack of small change. The coins are backed by $50 million U.S. through Afrexim Bank to the Zimbabwe central bank. The Zimbabwe economy completely collapsed due to hyperinflation, leaving the country without any domestic currency. Millions of citizens lost their entire life savings in the crisis.
Since that time foreign currencies including the British pound, European Union euro, South African rand and the U.S. dollar have been made legal. There have been fears that bond coins and bank notes issued by the Zimbabwe central bank are an attempt to re-insert a domestic currency despite the lack of an economy to be able to back it.
While it appears Zimbabwe was importing this fresh supply of bond coins from South Africa without drawing any attention to the shipment for economic reasons, Zimbabwe is insisting the only problem has been the security breach that ensued.
According to the Sept. 21 issue of AllAfrica.com, “In his Mid-Term Monetary Policy Statement presented in August, Mangudya said he would drip feed the additional currency into cashless Zimbabwe.”
Prestige Carriers driver Tinashe Sikwila was charged on Sept. 25 with taking an image of the invoice for the bond coins. The invoice is from Gerda Janse van Vuuren, South African Mint chief financial officer. It is addressed to Reserve Bank of Zimbabwe’s Deputy Director Banking Operations Professor Kuveya for 126 drums of the coins minted at a cost of $386,125. The image was shared with individuals who posted the image on social media.
The government alleged in Harare Magistrates Court in Zimbabwe that Sikwila violated the Official Secrets Act since he was entrusted to provide security for the shipment. The coins were struck at the South Africa Mint. Sikwila was detained at the Beitbridge Border Post by officials aware of the unwanted publicity surrounding the coins.
Bond coins have continued to circulate despite the suspicions of local citizens, while bond notes have not. The greatest fear is the bond money may be a back door way of Zimbabwe re-introducing its worthless currency. The incident may have triggered new rumors about the nation’s currency, according to the Sept. 27 issue of News Day. The newspaper reported RBZ Deputy Governor Kupukile Mlambo saying fake news regarding Zimbabwe currency has been appearing on WhatsApp and Facebook.
Mlambo said, “The bank dismisses the statements in their entirety as false, irresponsible and malicious. There was nothing like that. As you could see, the message was not professional. Bond notes have no expiry date and we will continue to use them. The central bank has no Twitter account or some sorts of accounts, so any communication coming from those platforms are null.”
The message to which Mlambo referred indicated that the central bank was about to devalue and replace its current bond notes as of Nov. 1. The message suggests the RBZ is trying to promote One Wallet, Ecocash and Telecash mobile transfer platforms. Part of the message reads: “Let us all go and deposit our bond notes to the banks before they become valueless. Do not be caught off-guard hoarding the bond notes until they become valueless.”
In fact Mlambo indicated new higher denomination coins meant to counter black market practices may be in the planning stage. According to Mlambo, “[The] government does not promote the black market and we are still in talks to maybe, perhaps introduce new bond coins in $2 and $5 so that we curb the business of the black market. These are much heavier for one to sit in the street with. We hope the policy will be implemented soon.”
The current bond $1 coin has a weight of 9.06 grams and is composed of a brass ring and a nickel-plated steel center plug. Higher denominations are issued in note format.
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