News that the Reserve Bank of Zimbabwe (RBZ) leaders say debate on the literal banning of the usage of the United States dollar as a currency of trade in Zimbabwe is worrying.
We plead with the central bank to learn from history, including the reality that people and businesses’ trust in the local currency, by whichever name, is very low.
As Zimbabwe’s leading liberal economic think-tank, we advise the RBZ that illiberal and command economics are not an anchor to Zimbabwe’s aspiration of an upper-middle economy by 2030.
The RBZ must allow the market to determine the forex exchange rate. Any invisible hand on the forex market leads to the flourishing of the informal forex market. This further threatens the national aspiration of prosperity and growth.
The Zimbabwe Economic Freedom Audit of the year 2024 discovered that Zimbabwe still ranks low, 124/132 countries in terms of economic freedom. Sound money was one of the key parameters in the study. It was noted that Zimbabwe’s lack of a stable currency, in which people freely deposit their faith is a big impediment to commerce and investments.
The recommendation is for the central bank, the RBZ, to exercise discipline by limiting itself to be a banker of bankers, ensuring currency stability through a constantly rising stash of gold savings among others factors.
We encourage Dr Mushayavanhu, the RBZ Governor to be patient, consultative, and use moral suasion to build confidence in the Zimbabwe Gold (ZiG). We remain confident that the RBZ will exercise caution and play an active role to ensure that Zimbabwe joins other progressive nations with their own stable and trusted currency.