RESERVE Bank governor Gideon Gono’s plans for a new currency fell victim to Zanu PF’s politicking, forcing him to introduce higher denomination bearer chequ
es instead of new bank notes he had printed for Sunrise 2, the Zimbabwe Independent heard this week.
Highly placed sources in the central bank said Gono’s proposal for a new currency under the second phase of the currency reform was shot down by cabinet a week before launch, forcing the governor to go back to the drawing board to print higher denomination bearer cheques.
Gono in November showed business executives, bankers and journalists a set of new currency notes including a $500 note (pictured above) which presumably had lost some zeros along the way, but launched new bearer cheques a month later.
The sources said cabinet in the first week of December summoned Gono to update it on the currency changeover and to explain its advantages.
Cabinet questioned how the currency would sustain its value under the prevailing inflationary situation, leaving Gono with no option but to go for the higher denomination bearer cheques he had tried to resist earlier on.
They said cabinet argued that a new currency would still be eroded by inflation and should only be launched after addressing economic fundamentals.
Former Finance minister Hebert Murerwa was the first to propose higher denomination bearer cheques over a year ago, but his idea was shot down when Gono knocked off three zeros.
“After the cabinet meeting, Gono went back to design the new $250 000, $500 000 and $750 000 set of bearer cheques which explains why the roll-out of the programme had to be delayed by two weeks even after logistical issues were resolved,” one source said.
The changeover, which was expected to take place well ahead of the Christmas holiday to enable people to access money, only happened four days before Christmas, forcing large numbers of people to cancel their journeys after failing to access cash.
“The changeover, which was supposed to be launched in the second week of December, only materialised on December 20 to enable the central bank to prepare the new notes,” the sources said.
They said a closer scrutiny of the new bearer cheques shows that Gono had to transform some of the smaller denominations that could not be used two years ago into higher denominations.
“The $750 000 note clearly shows that it was previously a $1 000 note that was redesigned since it retained the $1 000 watermark,” a source said.
Delays in the rollout of the programme happened at a time when Zanu PF was organising the “million man” march and its extraordinary congress in December.
However, the new denominations have not solved the two-month cash crisis with queues at banks getting longer each day.
Depositors are spending days in the queues hoping to get cash. The new currency that Gono introduced is still in short supply. Even extending the lifespan of the $200 000 bearer cheques has not resolved the cash crisis.
The situation is likely to worsen within a fortnight as parents require large sums of money to prepare for the opening of schools.
Gono blamed cash barons as the biggest culprits in the cash crisis, saying the RBZ had enough evidence to that effect.
He said as at November 15, cash in circulation stood at $58 trillion, but banks were holding an average market-wide float of $1 trillion, leaving $57 trillion “floating somewhere out there”.