Zimbabwe cannot join the Rand Monetary Union because it does not have its own currency which is one of the major requirements, Central Bank governor John Mangudya told The Chronicle.
Although Zimbabwe adopted a multi-currency regime in 2009 and nine currencies can trade freely in the country at the moment, the United States dollar has become the dominant currency, accounting for 95 percent of the transactions in the country.
This has made the country highly uncompetitive and has also turned it into a “fishing pond” for United States dollars.
Industry and business have been pushing for the adoption of the South African rand instead but Mangudya told The Chronicle that the fundamentals associated with the adoption of the rand as a formal currency were not right.
“The rand issue is very simple. We could have joined the Rand Monetary Union or the SACU (Southern Africa Common Union) in 2009 but there are certain criteria to doing that, which is why we are using a multi-currency system and not a single currency,” he said.
“What you are asking for is very dangerous because we might go into a worse situation. You cannot have a rand zone without your own currency, and our time is not now.
“South Africa cannot supply the whole region with a currency. This is why we are introducing the bond notes which are a restraint measure meant to incentivise exports.”
Zimbabweans are against bond notes because they view them as local currency and fear that their introduction could result in the hyperinflation they experienced eight years ago.
See also:
Zimbabwe says bond notes are an anti-money laundering tool
Can the rand rescue Zimbabwe’s economy?
South Africa pressing Zimbabwe to adopt rand
Zimbabwe bank boss backs South African rand rejection but says country won’t block its use
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