WITH our “old money” we have been surviving using paper currency with face values of from $500 to $100 000. Admittedly the bank notes with a value of $500 and $1 000 are virtually worthless, and the largest denomination bearer cheque of $100 000 is worth far t
Given these simple truths, self-evident to even the least sophisticated among us, how does Reserve Bank governor Gideon Gono justify his new range of bearer cheques?
His newly introduced bearer cheques range from one cent to $100 000 — that is, in terms of “old money”, from $10 to $100 million.
What on earth can justify the introduction of bearer cheques so worthless as the new bearer cheques with a face value of one, five, 10 and 50 cents ($10, $50, $100 and $500 in old money terms)?
In their ignorance, some people may believe that these may be of some value if the rate of inflation starts to decline. Unfortunately they are confused, understandably in Zimbabwe’s present circumstances, as to the difference between a decline in the rate of inflation and a decline in prices. The former may happen (that is prices may rise at a slower rate). The latter will not.
Given that prices will most certainly not decline, of what possible use are these new bearer cheques denominated in cents?
Also, given his previous reluctance to issue any bearer cheques with a reasonable value, why now the introduction of a bearer cheque for the equivalent of $100 million in old money? Perhaps he is less optimistic about his anti-inflation drive than he cares to admit.
If as much thought has gone into the rest of his monetary policies as has gone into the choice of new bearer cheque denominations, then we really are whistling in the wind in expecting any improvement.