Reports indicating that the Reserve Bank of Zimbabwe (RBZ) will soon introduce higher denominations of banknotes have sparked debate with some commentators in support of the move while others remain unconvinced of the merits of such a move.
Reports over the weekend claimed that the RBZ will introduce into circulation new $50, $100 and $200 banknotes this year.
Affirmative Action Group Matabeleland chapter president Reginald Shoko told NewsDay that the introduction of higher dominations will ease cash shortages and ideally, the largest denomination must be equivalent to US$20, roughly ZWL$2 000.
While acknowledging that the introduction of bigger denominations could be a good move, Consumer Council of Zimbabwe (CCZ) regional manager for Bulawayo, Comfort Muchekedza, said banknotes could spread the coronavirus to all corners of the country. He said:
With the increased cases of coronavirus, banknotes are also mediums of transmission; they easily exchange hands and move so fast to all corners of the country.
National Consumer Rights Association advocacy advisor Effie Ncube said higher denominations may drive up inflation. Said Ncube:
On the negative side, it may drive up inflation because each time you add new money into the market you drive up inflationary pressures or prices. We may see a lot of prices of different commodities going up.
Zimbabwe’s highest denomination currently is the $20 banknote which is roughly equivalent to US$0.25 and informal traders are now using Zimbabwe dollars as change while transacting in US dollars.