Financial Gazette (Harare)
4 January 2008
Harare — THE cash crisis persisted this week despite the central bank scrapping plans to demonetise the $200 000 denomination notes and injecting an additional $33 trillion into the banking system.
Lengthy banking queues remained a common feature at all banking halls, with the bigger institutions, particularly Barclays Bank (Zimbabwe), being the hardest hit.
Some banks had however, started feeding notes into their ATMs, easing pressure in the banking halls where restive clients vowed to keep their money due to increasing difficulties faced in withdrawing their money for urgent commitments.
But cash from the ATMs was quickly getting spent because of the huge demand.
An earlier drawback in the Real Time Gross Settlement System (RTGS), an electronic payment system now commonly used to beat the cash crunch, was cleared after bankers said the central bank had acknowledged it was causing more inconvenience to depositors and hence resulting in increased pressure for hard notes.
Banks had started requesting a number of details for all RTGS payments, including invoices for recipients of payments.
"That glitch has been cleared," a source told The Financial Gazette, indicating that RTGS payments were now being processed "without questions being asked".
"Banking should be about convenience and the governor understood that," the source said.
Central bank governor Gideon Gono said the $200 000 note, which he had said would cease to be legal tender by mid night on the last day of 2007, had been re-instated and would remain legal tender.
When he announced the phasing out of the $200 000 notes, which he said was the anchor note for cash barons fuelling the black market, Gono introduced $750,000, $500,000 and $250,000 notes.
Gono said the bulk of the country's currency was outside the banking system.
He said $65 trillion of the $67 trillion the central bank had injected into the economy was unaccounted for in the banking sector.
It was not clear how much of that money had been brought back into the formal banking system before the reversal of the planned phase out, but Gono indicated that daily deposits with banks had increased during the phase out period, "with most high volume cash handlers in the commercial chain once again being visible on the deposit counters".
He remarked: "This lent credence to the central bank's earlier point that some sections of the business community were culpable in aggravating the cash shortages through hoarding cash, later selling it outside the formal banking system."
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