What would happen if all Zimbabwe banks closed today?


Chaos. Panic. Outrage. You name it.

Zimbabweans have trashed four currencies in the past decade. First it was their own currency the Zimbabwe dollar. At independence in 1980 Z$1 was worth US$1.50 but by 2009 US$1 was worth Z$300 trillion.

They went for the South African rand which was more popular than the US dollar when the country adopted the multi-currency system in 2009 but in no time it gave way to the US dollar which now dominates the market.

They trashed the US dollar in that its value in Zimbabwe is much lower than elsewhere in the region.

They have also trashed the bond note which was supposed to trade at par with the US dollar but provide ready cash as the US dollar was fast disappearing from open circulation.

Various reasons, theories and arguments have been offered. But they all point to one problem. Lack of social cohesion or a common purpose.

Maybe Zimbabweans could learn from what happened in Ireland in 1970. This is what happened according to an excerpt from the book: Utopia for Realists by Rutger Bregman.

“On May 4, 1970, this notice (Closure of Banks)  ran in The Irish Independent. After lengthy but fruitless negotiations over wages that had failed to keep pace with inflation, Ireland’s bank employees decided to go on strike.

“Overnight, 85% of the country’s reserves were locked down. With all indications suggesting that the strike could last a while, businesses across Ireland began to hoard cash. Two weeks into the strike, The Irish Times reported that half of the country’s 7 000 bankers had already booked flights to London in search of other work.

“At the outset, pundits predicted that life in Ireland would come to a standstill. First, cash supplies would dry up, then trade would stagnate, and finally unemployment would explode. ‘Imagine all the veins in your body suddenly shrinking and collapsing,’ one economist described the prevailing fear, ‘and you might begin to see how economists conceive of banking shutdowns.’  Heading into the summer of 1970, Ireland braced itself for the worst.

“And then something odd happened. Or more accurately, nothing much happened at all.

“In July, the The Times of England reported that the ‘figures and trends which are available indicate that the dispute has not had an adverse effect on the economy so far’. A few months later, the Central Bank of Ireland drew up the final balance. ‘The Irish economy continued to function for a reasonably long period of time with its main clearing banks closed for business,’ it concluded. Not only that, the economy had continued to grow.

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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.


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