Published by the government of Zimbabwe
20 December 2007
Harare — The $200 000 bearer cheque will cease to be legal tender at the end of the month, new bearer cheques of $250 000, $500 000 and $750 000 will be issued today, and there will be strict enforcement of limits on deposits, Reserve Bank Governor Dr Gideon Gono announced last night.
At the same time he is raising the daily withdrawal limit for individuals to $50 million from today.
The rest of the current family of bearer cheques, including the $100 000, will remain legal tender. Dr Gono, speaking on ZTV and radio, said the "cash barons" preferred $200 000 bearer cheques and most of their holdings were in this denomination.
The $200 000 bearer cheque does remain legal until December 31 and traders will still be able to deposit such notes up to the close of business on January 2 next year.
The measures were designed to end the cash crisis and hammer the "cash barons" accused of holding the bulk of the $67 trillion cash in circulation.
However, the deposit limit will remain at $50 million for individuals, with no questions asked, and at $750 million or at similar sums to daily banking for the last fortnight for companies if these are higher than $750 million.
Those wanting to deposit more will have to fill in a Source of Funds form and pass scrutiny by Zimra, the Anti-Corruption Commission and anti-money laundering officers. Zimra will have powers to instantly assess taxes due, and these will be garnished to the bank, who, Dr Gono expected, would then recover the money from the depositor.
Slightly easier rules will apply for rural dwellers. Dr Gono said that investigations had found no rural cash barons and so roving teams of RBZ officials would swap $200 000 bearer cheques for new denominations. Restrictions would be far more flexible because the central bank has realised that people might have a lot more through selling of crops and livestock.
However, he warned that there would be "due diligence" to ensure that cash barons did not launder their holdings through rural relatives or pay rural people to launder the notes.
Banks will remain open on Saturday (Unity Day) and Sunday to ease the transition. Surveillance teams will be at all branches. Banks have been warned that if there is any malpractice, such as exceeding the withdrawal or deposit limits, then the offending branches will be closed within 24 hours and the bank itself will come under very strict scrutiny.
He expected the cash shortage, with the new amounts he is pumping into the system, to ease within a few days, but said it could not happen overnight.
He encouraged retailers to accept cheques and for consumers to use electronic means, including RTGS for sums above $50 million.
Unlike more drastic currency changes last year, there will be no "slashing of zeros". Dr Gono said that businesses, which were seeking such a redenomination of the currency to prevent their computers from crashing, had sent prices soaring last year. This was the product of a mindset using to dealing with billions and trillions and he was not willing to sacrifice consumers.
Necessary legislation has been gazetted and will be available today. Bankers have already been briefed at meetings this week and have been warned to comply fully.
"The cash barons are really in trouble. We will not cow down to any form of favouritism."
Dr Gono apologised for the delay in taking action to ensure liquidity, a legal duty of the RBZ, since the cash shortages surfaced six weeks ago.
He said the RBZ wanted to understand why the sums considered more than adequate for Zimbabwe's economy, even with hyperinflation, were vanishing into thin air.
The Reserve Bank had found a web of illegal cash movements involving "cash barons", corrupt bank officials and those engaged in parallel market dealings and smuggling.
Some banks were allowing multiple accounts, with some individuals having up to 10 at a single branch. There were cases of people with power of attorney over 120 accounts at a single branch. There were accounts for children, some as young as six months, which were used as a cover to move billions of dollars.
The multiple bank accounts were used circumvent limits on withdrawals and deposits.
The Reserve Bank had compiled 32 volumes of documented evidence of what some bank employees' illicit dealings. These had been given to the banks concerned and "the firings have started".
There were 7 500 shelf companies with accounts. These were companies that did nothing except move vast sums in and out of their accounts, without any underlying economic activity.
Dr Gono was prepared to name those involved, but only before a parliamentary committee. He challenged the Budget, Finance and Economic Development Committee to summon him to give evidence.
He was also ready to give evidence on those who lied that they were representing the Reserve Bank when buying currency on parallel markets or taking part in other illegal activity. He said there was massive misinformation on what the RBZ was doing.
He blamed businesses, wholesalers, retailers, "politicians, politicians and politicians", bankers, smugglers and fuel companies for the shady activities that led to cash shortages.
Some businesses, retailers and wholesalers were selling most of their cash takings at premiums of up to 35 percent rather than banking them. Some bank employees were corruptly issuing single customers with billions without the necessary RBZ authority.
When asked none could give explanations.
The fuel importers were among the biggest cash collectors, while gold and diamond smugglers were not only hoarding cash but also destroying the economy.
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