Bond Notes! To Legitimise Or Not?

The debate about making the bond note Zimbabwe’s official currency continues. The government’s top adviser, Ashok Chakravarti, previously recommended that bond notes operate as the official local currency. However analyst’s have warned this could worsen the current economic climate hence quickening inflation.

International research body BMI Research has said that Zimbabwe is actually de-dollarising the economy. The Reserve Bank decided to increase the bond notes program from $200 million to $500 million. This will result in the rate of inflation increasing and will likely result in shortages of imported goods.

The introduction of bond notes in November last year has seen the surrogate currency trading at a 30% premium with the dollar. This has led to a three-tier pricing system, one for bond notes, the United States dollar and plastic money despite monetary authorities’ insistence that the bond notes are at par with the dollar.