Harare — DEBATE on whether to continue with the multi-currency system or readopt the local currency continues, but no one has been able to explain the mystery surrounding the survival of the ZW$50 billion note that is still circulating among informal traders and commuter omnibus operators and their passengers.

In those circles, three trillion dollars of the notes are adjudjed equivalent to US50 cents or 5 rand and is enough to pay for a one-way local trip and can buy a soft drink or a packet of biscuits.

Whatever the mathematics or matrix, the note has remained legal tender and has withstood hyperinflation and the challenge of the hard currencies. It has even surprisingly survived wear and tear since it is not being replenished with new notes.

All other Zimbabwean dollar notes are now history, but this one note has stood the test of time. "Mari ichiri kushanda iyi, tete. Ichiri mucirculation torai. (Take this money is still in circulation, my sister. Take it for change)," is the common refrain from commuter omnibus conductors and vendors alike.

This ZW$50 billion note from the central bank's printing mill has miraculously survived the multi-currency regime, holding its own against stronger currencies from the US, South Africa and Botswana.

The three trillion dollars are mainly accepted in Harare by commuter omnibus operators and street vendors selling sweets, fruits, small and cheap Chinese products like food, tools and clothes.

Chronic and persistent local currency shortages that had become common in the banking system due to the failure by the Reserve Bank of Zimbabwe to keep up with the rising demand for cash in a deepening hyperinflationary and economic dysfunctional environment, were solved with the official dollarisation.

Many people now hold a significant portion of their assets in the form of foreign currency-denominated portfolios and liabilities and generally have been doing their day-to-day business in foreign currency.

The $50 billion note was part of the banking mechanism in those hard times, but how it remained in circulation is a mystery that begs studying as we debate whether or not the Zim dollar should be reintroduced.

The central bank, however, allowed some business concerns to provide services and products in foreign currency, significantly allowing a sustained flow of basic commodities that had disappeared from shop shelves.

Generally dollarisation works in response to economic instability, rising inflation and loss of confidence in the local unit as people seek to diversify the portfolios and liabilities and keep assets in US dollar-denominated or any stable and secure foreign currency as a store of value and a means of payment.

The recent global financial crisis has forced many monetary authorities to revise their long-held theories and monetary policies on macro-economic management and monetary policy in the face of rising inflation, interest rates, falling commodity prices and recession tendencies that most global economies are officially now in.

Two poles have generally emerged with the first group advocating continued pursuit of market-friendly reforms, to controls on capital mobility and trade, while the other postulates that dollarisation and floating exchange rates regime management is the way out.

In Zimbabwe, a mixture or concoction of whatever works for a day or two is adopted only to be discarded the next morning.

Countries that have adopted full or partial dollarisation include Argentina, Brazil, Peru, Bolivia, Turkey and Ecuador, among others.

Dollarisation, as in the case of Zimbabwe, has shown that it may work to correct rising inflation or hyperinflation where the cost of using the local currency for day-to-day transactions has forced people to adopt an alternative store of value and use foreign currency to buy and pay for practically anything from transport, rentals, school fees, medical bills to food.

Three forms of dollarisation are identifiable thus: holding of foreign-currency denominated assets by the banking system; dollar or foreign currency in circulation; and cross-border foreign currency deposits in banks in foreign countries.

Mr Trust Chikohora, financial advisor, consultant and businessman, says the central bank has no capacity to print money anymore making it very difficult for people to conduct business normally using the local unit.

Before dollarisation, the central bank tried to discourage people from getting local currency from banks and use it to buy foreign currency on the parallel market by lowering daily withdrawal limits, making it difficult for people to pay for a one-way trip from home to work on that daily withdrawal limit.

It used to take one four to five days to withdraw the daily maximum for one to be able to accumulate enough Zimbabwe dollars to buy a loaf of bread.

It was widely held that if the authorities were to dollarise, the Government would lose a cheap source of free money that they get by printing the local unit and sell it direct on the parallel market to get foreign currency.

Vitoria Saddi of the Latin American EcoMonitor, writing in The Measures of Dollarisation, says: "Financial dollarisation, defined as the holding by residents of foreign currency assets and liabilities, has been placed in the policy debates of developing economies as a major trigger of currency and financial crisis.

"The reasons include its influence on monetary policy and, most prominently, the deleterious impact of exchange rate depreciation on the solvency of dollar debtors (the balance sheet effect)."

The Zimbabwean economy is battling a double blow of the impacts of the domestic economic crisis and the global financial crisis that has rocked and plunged global markets into turmoil, triggering a world recession that has brought untold economic suffering to many people in developed and developing countries.

Going back to Mr Chikohora, his argument is that Zimbabwe has tended to be insulated from external financial shocks, as it has not received any foreign direct investment for a very long period of time now.

"Zimbabwe has enough problems that supersede those that are premised on the global financial crisis and it would be a waste of time for the country to focus on implied impacts of a wave that may not affect us," Mr Chikohora says.

Tourism may, however, be affected as the chief sources of tourists to Zimbabwe are the countries that are grappling with the global financial crisis.

The prices of brand crude, dollar commodities, metals prices on the metals market, commodities like maize and other cereals have been going down on the international market and in Zimbabwe as well despite the fact that many workers are not yet paid their salaries in foreign currency, depending only on allowances.

Zimbabwe has to contend with an acute shortage of fuel, electricity, food, agro-chemicals and inputs, medicines, spare parts for mechanical equipment for industries and other sectors like mining, forcing the country to import critical minerals like coking and bituminous coal that are abundant in the country in Hwange in the north, Chiredzi in the south and Sengwa in Midlands Province them from Botswana.