For Lamberti, there are no major economic hurdles preventing a rescue of Zimbabwe’s economy, and adopting the rand would be one viable option to achieve this. A larger challenge, however, is political.
“In principle, monetary reform is not that hard in Zimbabwe, whichever option it were to choose. The real problem is political. As long as the state is run as a fiefdom and industry is systematically destroyed and productive people looted from, there is little hope. Mugabe knows that meaningful currency reform diminishes the ability of the state to loot the country. That is the big hurdle.”
Elsewhere in the region, the rand has been adopted with some success. Although Lesotho, Namibia and Swaziland all maintain their own currencies, these are all pegged to the rand, and the rand is widely accepted for trading purposes. Botswana pegs its pula to a basket of currencies, with the rand given the greatest weighting.
Economist Phillip Haslam, Lamberti’s co-author, argues that the rand could bring some immediate advantages to Zimbabwe, including the virtual elimination of currency fluctuations for cross-border trade. But he has an even more radical proposal to rescue the country from its currency woes: the bitcoin.
Invented in 2008, bitcoin is a digital crypto-currency that is generated by harnessing the processing power of computers. It is not backed by any government or central bank, which might make it easier for Zimbabwe to adopt without sacrificing too much autonomy.
“‘We are very excited about bitcoin as a stable currency alternative. The thing about bitcoin is once you import it into the country, you don’t have the problem of the currency eroding and perishing like you have with notes. It’s a system that allows for privatised banking. Effectively, the bitcoin system is both a currency and international payments platform.
“If Zimbabwe establishes a privatised bitcoin national currency, if the market naturally went to a bitcoin type currency, as other currencies around the world indicate weakness with money printing happening, you’d have a whole lot of currency flowing into Zimbabwe. Zimbabwe would transform from a basket case to a global banking centre in a stable crypto currency. And that would be fairly quick.”
It's an interesting idea, although unlikely that any of Zimbabwe’s decision-makers will adopt such a radical proposal. But it illustrates the greater truth: that, with political will and far-sighted policymakers, there are paths out of Zimbabwe’s current economic malaise. Adopting the rand is one.
By Simon Allison. This article is reproduced from ISS Today
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