Reserve Bank of Zimbabwe

From Pindula

Reserve Bank of Zimbabwe
(RBZ)
Reserve Bank of Zimbabwe logo
Reserve Bank of Zimbabwe logo
Headquarters Harare, Zimbabwe
Ownership Government Owned
Governor Dr. John Mangudya
Central bank of Zimbabwe
Currency Zimbabwe Dollar
Preceded by Reserve Bank of Rhodesia and Nyasaland

The Reserve Bank of Zimbabwe (RBZ) is the central bank of Zimbabwe. Its offices are located at number 80 Samora Machel Avenue in Harare. The Reserve Bank of Zimbabwe operates under the Reserve Bank of Zimbabwe Act, Chapter 22: 15 of 1964. The Act provides for the Board of Directors and the post of Governor who is responsible for the day-to-day administration and operations of the Bank. The Governor is assisted by two Deputy Governors.

Background

The RBZ is remodelled more or less similar to the Bank of Rhodesia and Nyasaland which was established as a central bank for the Federation of Rhodesia and Nyasaland (FRN).[1] It thus has its origins to the Central Bank of Rhodesia and Nyasaland. The RBZ was the successor of the Central Currency Board which had the sole prerogative of issuing money and regulating the monetary system of the FRN.

Originally, the RBZ was situated in the then Vincent Building (present day Mapondera Building)and it was later moved to the then Bank of Chambers at 76 Samora Machel Avenue in June 1957.[1] The carrying capacity of this building become under threat due to an increase in the operations of the bank as well as the growth of the staff. This prompted the establishment of another building which had the capacity to encompass all these new changes, which saw the relocation of the bank to number 80 Samora Machael Avenue. This building was officially opened on by President Robert Mugabe on 30 May 1996.[1]

Roles and Functions of the RBZ

The RBZ operates in accordance to the dictates of the national constitution. By extension, it is only answerable to the law. It operates under the Reserve Bank Act which mandates it to regulate and or create monetary policies, protect the currency in the interest of balanced and sustainable economic growth as well as regulating the circulation of money. This Act is also remodelled in accordance with the Reserve Bank Act of 1964 which had the same dictates.[1] The Act also stipulates that the RBZ is to be headed by a governor, who is usually appointed by the president on a five year term which is open to an extension.[1]

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The governor has the responsibility of governing the day to day operations of the bank as well as issuing monetary statements to keep the nation abreast in as far as the income of the state is concerned as well as its expenditures. The governor is assisted by two deputies and presently they are Dr. Charity Dhliwayo who was elected as an acting governor after the tenure of Dr. Gideon Gono's second term in 2013 and Dr. Kufukile Mlambo. The Act also obliges the bank to have a Board of Directors who usually represent the key sector of the economy.[1]

Challenges

The failures of the RBZ has largely been pinned to have been worse under the stewardship of Gono who was appointed as the central bank's governor from 2003 to 2013. During his tenure, the country's inflation skyrocketed to unprecedented levels. This literary meant the destruction of the local currency, the Zimbabwean Dollar. Gono's predecessor, Dr. Leonard Tsumba whose termed expired on 30 June 2003 has been distanced from this RBZ predicament though the Zimbabwean economic crisis dates back prior to the appointment of Gono.

During Gono's tenure, liquid crunch, which is currently affecting most banks became a wide phenomenon. People were obliged to withdraw an amount which was equivalent to US$5 which was inadequate. However, clean uncirculated notes were readily accessible and available at the parallel market, which was also referred to as the black market, something that began to be pinned on what Gono labelled as money launderers.

The central bank was also implicated in devoting itself more in what was referred to as its non-core business such as giving loans to farmers as well as purchasing farming equipment to be distributed to newly resettled farmers.[2] The central government was thus accused of spearheading ZANU PF campaigns.

Hyper-inflation

Zimbabwe would see a world record inflation rate of 231 million percent (official figure as of July 2008) to the extent that the 2008 budget that was presented was for a staggering 66,500,000,000,000,000,000-Zimbabwean dollars (US$3 billion). The budget was presented in both local and US$. As Reserve bank Governor, Gono would thrash zeros from the local currency thrice during his tenure in a bid to curb the ever growing inflation but to no avail. This saw the introduction of new money denominations, some of which had expiry dates. On Jan 29 2009, the acting Minister of Finance, Patrick Chinamasa scrapped the local currency in favour of a multiple currency economy. Currencies adopted at the time would be the American dollar (US$), British pound (£), South African Rand (ZAR) and the Botswana Pula (BWP).

Bond Coins

In December 2014, RBZ would introduce a currency of coins backed by a bond to ease transaction change problems. Since the introduction of the multi-currencies in 2009, Zimbabweans were forced to take small items like sweet, cigarettes, ball-point pens, and credit notes as change because of the shortage of US dollar and South African rand coins in the country. The bond coins were denominated in 1 cent, 5 cents, 10 cents and 25 cents. The coins were brought into circulation through the local banks. The coins were minted in South Africa. At the time of introduction, the coins were equivalent to the value of US cents.[3]

List of Reserve Bank Governors

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References

  1. 1.0 1.1 1.2 1.3 1.4 1.5 , History of the Reserve Bank, RBZ, Published: No date Given, Retrieved: 16 June 2014
  2. ,Reserve Bank of Zimbabwe - The printing machine, Zimbabwe blogspot, Published: 11 Nov 2009, Retrieved: 16 June 2014
  3. ZIMBABWE'S 2014 BOND COINS, Pindula, Retrieved: 29 January 2015