De-dollarisation the only way to go – Cross

It cannot go on. If we allow this situation to continue, the ZIG is dead, like all its predecessors and no one will mourn its passing. Our top business newspaper carried the headline on its front page, ‘We cannot permit the de-dollarisation process to be too radical’. This voice came from the consumers of hard currency cash that currently dominates the markets. The minority who try to produce anything here for sale, are either silent, or have no voice. When they argue for swift demonetarisation of the USD and other currencies, they are laughed at.

We need our own currency. The number of countries that allow what we have here, the so called multi-currency system, you can count on one hand and they all want to go back to their own currency. The reasons are simple, without your own currency, you cannot compete in this globalised world. Why has the third largest economy in the world devalued their currency, the Yen, by over 40 per cent this past year? It is so that Japanese manufacturers can remain competitive. The Chinese undervalue their currency and keep it that way by buying USD off the market when the Yuan strengthens. In the process building up reserves that allow them to borrow money at the lowest cost of any major economy.

All our neighbours have done the same thing. All foreign currency inflows are automatically converted to their local currency on arrival and a functioning interbank market ensures that the real market value of the local currency is maintained and conversion back available on demand to meet the needs for imports. They all have stable currencies and you cannot use the USD in the domestic markets. If we did that, our currency would be the strongest in the region and we would have to follow the example of China and start buying in USD and other major currencies for our reserves so as to help our own industries compete.

Such a move, supported by our sound fiscal and monetary policies and the huge surplus of hard currencies in our market, would quickly start to bring our informal sector into line, curb illegal imports and price manipulation by dealers who produce nothing and employ nobody, but make substantial profits from simply trading currency.

It is that simple.- Eddie Cross

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