HomePoliticsBearer cheques outlive 'expiry' date

Bearer cheques outlive ‘expiry’ date

Gift Phiri

THE Reserve Bank of Zimbabwe (RBZ) has kept bearer cheques in circulation, exactly a year after the popular bonds were introduced.

ans-serif”>The RBZ introduced the large denominated paper as legal tender on September 28 last year as a “stop gap measure” to ease an unprecedented cash crisis in the country.

The central bank first issued a range of bearer cheques valid up to January 31, 2004. In January the RBZ released another batch that carried changed dates of expiry from January to June 30. In June commercial banks received another batch with a December 31, 2004 expiry date. The bearer cheques are in denominations of $5 000, $10 000 and $20 000. Despite the fact that some bearer cheques expired on June 30 2004, they have remained legal tender.

There were fears this week that banks would run out of money due to panic withdrawals following Trust Bank’s closure last week. However the central bank said there was enough cash. It said “total cash holdings amounted to $1,8 trillion, comprising bearer cheques of $1,5 trillion and banknotes of $300 billion.”

Economic analysts said despite reports that the cheques could be easily counterfeited, the RBZ was keeping them in circulation as a way of avoiding higher denomination notes.

“Government may have made a tactical mistake by giving the cheques an expiry date,” a Kingdom Holdings Financial analyst said. “The cost implications are immense. Obviously billions of dollars have gone into the printing of the cheques and more billions of dollars will be needed at the end of the year to print more.”

The largest bank note is the $1 000 bill which cannot buy a loaf of bread.

Coins and smaller notes such as the $10, $20, $50 and $100 have virtually ceased to be instruments of trade. The RBZ had not responded to questions at the time of going to print.

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