Let me pause here and explain. Madam Speaker, the reserve money as of Friday last week was ZWL2.6 trillion. Converting this at the exchange rate of 33 000 average which was at the interbank rate, that gives you US$90 million. So really, the value of the notes and coins in circulation was only US$90 million. When you compare this to the value of the cover which is US$185 million in gold plus US$100 million that is US$285 million worth of cover. That is more than enough. So, the gold and cash reserve holdings with the bank represents more than three times cover for the local currency being issued.
Madam Speaker, the intervening exchange rate shall be determined also by the inflation differential between ZiG and USD inflation rates and the movement in the price of the basket of precious minerals held as reserves. The weights will be determined by the composition of reserve assets.
I now turn to interest rates. Madam Speaker, the bank policy rate has been adjusted from 130% per annum to 20% per annum consistent with the new Monetary Policy Framework. The overnight accommodation interest rate has been set at 5% above the bank policy rate, and the bank deposit facility interest rate has been set at 7,5% rate below the bank policy rate, thus giving a starting interest rate corridor of between 11% and 25% per annum. Savings and time deposit interest rates of ZiG are set at 9% and 7.5% below the bank deposit facility rate of 2.5% respectively while interest rates on FCA deposits remain unchanged at 1% and 2.5% for savings and time deposits respectively.
Let me turn to the issue of bank charges. Cognisant of the calls of bank charges by the public for affordable and reasonable bank charges, with immediate effect, bank charges have been scraped for both FCA and deposit accounts that maintain a consecutive minimum daily balance of USD100 or below and its equivalent in ZiG for a period of up to 30 days. This will avoid instances of low-cost accounts being charged interest fees to the point where accounts reach negative balances…
THE TEMPORARY SPEAKER: Order! Hon. Minister. Hon. Members, let us listen attentively so that when we ask questions, we ask pertinent questions not petty questions that will eat our precious time with the Minister. Please let us converse in silence. You may proceed Hon. Minister.
HON. PROF. M. NCUBE: Thank you Madam Speaker Ma’am. I will take that again. Cognisant of the calls by the banking public for reasonable bank charges, with immediate effect, bank charges have been scraped for both FCA and ZiG deposit accounts that maintain a consecutive minimum daily balance of USD100 and below or its equivalent in ZiG for a period of up to 30 days. This will avoid incidences of low-cost accounts being charged maintenance fees to the point where accounts reach negative balances, and in the process prejudice depositors and discourage potential savings. With this summary, I hope that Members will appreciate what has been done here in terms of introduction of the new monetary regime. The main issue being the introduction of a new currency, but also seeing the drop in interest rates among other measures. It is also a critical step towards our long term de-dolarisation agenda. It is our hope that this will bring the much-needed currency stability. Thank you.
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