Zimbabwe News

Reserve Bank Of Zimbabwe reportedly summons bank CEOs

The Reserve Bank of Zimbabwe (RBZ) has summoned chief executives from major financial institutions, specifically banks, to convene for a meeting on Friday morning. This meeting precedes the eagerly awaited launch of a new currency.

As reported by The NewsHawks, bank chief executives will engage in discussions with both the outgoing RBZ governor, John Mangudya, and his incoming successor, John Mushayavanhu.

Their focus will be on the intricacies and procedures involved in introducing the structured currency, which will be outlined in a delayed monetary policy statement (MPS).

Mushayavanhu, whose official appointment was moved up to 28 March (instead of 1 May), will assume a prominent role tomorrow. He will be supported by the outgoing governor during this crucial phase to ensure a seamless transition.

Although Mangudya’s term officially concludes on 30 April, he is expected to take leave soon and gradually step away from his current position. However, he will re-emerge later as the chief executive of the Mutapa Investment Fund (Sovereign Wealth Fund). The NewsHawks quoted a monetary authority as saying:

We have summoned bank chief executives or heads of key financial institutions to a meeting tomorrow morning to discuss the launch of the new currency before its subsequent announcement.

We want to brief them about the process and modalities, which they were involved in during consultations anyway before the monetary policy is delivered.

The plan is for it to be presented by Mushayavanhu, supported by Mangudya who will explain issues afterwards.

The Zimbabwean dollar is now on a freefall – hitting US$1: ZWL40 000 on the parallel market – while annual inflation is 55.3%. Officially, the exchange rate is US$1: ZWL$22 447.5.

On Thursday, President Emmerson Mnangagwa visited the Reserve Bank of Zimbabwe where he was shown the country’s gold reserves ahead of the presentation of the 2024 Monetary Policy. He later posted on X:

Today, I toured and inspected the Reserve Bank’s gold reserves, a pivotal step in backing our new structured currency. This move reinforces our commitment to economic stability and lays the foundation for a prosperous future.

President Mnangagwa’s spokesperson, George Charamba, also took to X and elaborated on his principal’s visit to the central bank. He wrote:

Zimbabwe’s currency will be anchored on our gold reserves. To that end, His Excellency the President, Dr ED Mnangagwa, today visited RBZ vaults to satisfy himself that the gold reserves were indeed there, and enough to support the launch of a new currency.

A combination of gold – both in RBZ vaults and offshore – plus foreign currency reserves held by both RBZ and the Government, places Zimbabwe in good stead for the launch of the new currency.

Zimbabwe now has a policy of keeping a percentage of its gold as reserves, alongside other precious minerals. Those too bulky to be kept in physical form are offset by the gold equivalent.

This new policy rectifies an anomaly where a gold-producing country did not have reserves in physical form.

After the tour, the President fielded questions from journalists, many of whom sought assurances that the new currency would hold its own, and would be convertible.

The gold basis of the currency means its value moves in sympathy with the international prices of gold, thus escaping the instability wrought by speculative whims.

Gold coins, themselves a precursor to this new move on currency, have largely held, proving that a currency anchored on real wealth is bound to be durable.

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