US dollars disappears from Zimbabwe banking system

Transactional activity in Zimbabwe in recent weeks indicates a slow disappearance of the United States dollar, which is being replaced by bond notes.

The bond notes were introduced last year under the $200 million export incentive to supplement dwindling dollar supplies due to weak exports.

A survey by Standardbusiness in the central business district last week showed that banks were giving out less and less dollars, which are now available only from Automated Teller Machines (ATMs).

An FBC Bank depositor said the institution was dispensing money depending on the currency they had at the time.

"Sometimes we are given our withdrawals only in bond notes," the depositor said.

"There used to be days when I received my withdrawals in United States dollars or bond notes while other times it was in both denominations.

"But, most of the time now we are receiving bond notes and very rarely in US dollars."

Stanbic Bank was giving out $100 in bond notes inside the bank and another $50 in US$ from ATMs, making a total of $150 daily withdrawals.

Cabs was also giving depositors according to the available currency at that particular time.

"It depends on the branch but money is given out based on what the bank has on the particular day," a Cabs Bank depositor who identified herself as Julia said.

The dollar has also become elusive in supermarkets where customers used to get them through the cashback facility
In an interview with our sister paper, Zimbabwe Independent, RBZ governor John Mangudya confirmed the scarcity of dollars saying banks were holding on to the currency to facilitate foreign payments.

"Each bond note in the economy represents a proportion of up to 5% of the foreign currency earned on exports generated by the economy. It stands to reason therefore that banks are retaining the bulk of foreign exchange for foreign payments," he said.

"Bond notes will continue to circulate in the economy alongside other currencies in the multiple currency system."

According to RBZ statistics, $94 million of bond notes are in circulation against an aggregate value of the export incentive of $107 million.

In a recent monetary policy statement, Mangudya said RBZ was putting in place a redistributable measure that mitigated against skewed concentration of bond notes within the banking sector by limiting the maximum amount of bond notes that each bank should hold at any given point in time in relation to its level and type of transactions.

"This measure is necessary to ensure that bond notes are distributed proportionately according to the customer base or customer profile of each banking institution," he said.

He said the move would ensure that bond notes continued to trade at parity with the US$ and to reflect the fact that they were supported by the $200 million offshore facility.