Zimbabwe’s New Currency Exacerbates Poverty
By CultureBanx Team
Zimbabwe's central bank introduced a new currency called RTGS dollars
In 2009, the Zimbabwean dollar was destroyed due to hyperinflation
Zimbabwe's central bank decided to introduce yet another currency into its already crippled financial system. The country recently started trading a sharply discounted replacement currency called RTGS, as they attempt to ease a cash shortage that has paralyzed the economy and forced millions deeper into poverty.
Why This Matters: John Mangudya, Zimbabwe’s central bank chief perhaps views this as a safer and less risky bet after the Zimbabwean dollar was destroyed in 2009 due to hyperinflation. The BBC reported at its height prices were almost doubling every day and the central bank printed notes worth 100 trillion Zimbabwe dollars to try and keep up. The RTGS dollar is supposed to bring together bond notes, debit cards and mobile payments to make sure that they are all worth the same.
Herein lies the problem, the RTGS dollar which derives its name from the country’s interbank online payment platform, Real Time Gross Settlement came unexpectedly as a way to solve Zimbabwe’s currency problems. In a country with a traumatic history of hyperinflation its uncertain how much more the economy can bend before it completely breaks.
Zimbabweans have been able to use foreign currencies like the U.S. dollar and the South African rand to purchase goods. All of these currencies have a different exchange rate, meaning customers were charged different prices depending on what payment method they chose.
What’s Next: The government said it wants the price of the RTGS dollar to be determined by the market. Last week it fell to 4.2 per U.S. dollar, the lowest level in more than five months, according to marketwatch.co.zw. Currently, there are no plans to have notes and coins with "RTGS dollars" written on them and you cannot use them outside the country.
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