November 3, 2008 - http://www.thezimbabwetimes.com/?p=6744
By Our Correspondent
HARARE - The Reserve Bank of Zimbabwe has introduced new $1 million, $500 000 and $100 000 banknotes in a desperate bid to ease the recurrent cash shortages plaguing the inflation-ravaged economy.
The bills will officially come into circulation on Friday, although they were already on the foreign currency dealers market today.
As high as they are, though, the highest bill can only buy eight loaves of bread. The highest new note is equal to just US$6.
The new notes with be the 22nd, 23rd and 24th notes introduced by the Reserve Bank this year alone. The central bank also said it will review cash withdrawal limits to compensate for ever-accelerating inflation.
The withdrawal limit for individuals is still $50 000 a day while that for companies is $10 000.
In a statement last night, the central bank said: “In a market that has become predominantly speculative, most providers of goods and services are demanding cash as the only acceptable means of payment, penalising those that could otherwise be willing and able to use cheques for transaction purposes.
“In the measures underway, the Reserve Bank plans to introduce a number of new, higher denominations, review the cash withdrawal limits as well as commence aggressive campaigns for increased usage of other alternative means of payment.”
“The RBZ is fighting a losing battle,” economist John Robertson said in Harare.
“As long as the inflation remains high, cash shortages will persist. There is need to address the inflation by increasing production so that too goods do not (cost) a lot of money.”
Signs of a severe cash shortage are showing across the country as citizens are currently struggling to access cash from their various bank and financial institutions’ accounts.
A serious cash shortage has persisted since October 2007. The latest negative developments follow the move by German firm, Giesecke and Devrient, to half money paper supplies to Zimbabwe.
Long bank queues are once again part of everyday life in which the maximum withdrawal limit, which people say is too little, forces them to come back to the bank virtually daily. Bank sources hint the cash situation is poised to deteriorate further in the coming weeks.
“Right now, we have a situation whereby the country has no paper coming in, so the money that is currently circulating was printed some time back.”
“Due to the hyper-inflationary environment, there is an urgent need for more new notes, and this is the problem faced by the RBZ,” said an economist with a local bank.
The Munich-based firm, which supplied the RBZ with paper for bearer cheques, was asked by the German government to halt business with Zimbabwe because of concerns it was helping prop up Zimbabwe’s President Robert Mugabe.
In the capital city of Harare, long queues are a daily feature at every bank, but the longest queues can be seen at CABS, Beverley and the POSB.
People wake up to join queues as early as 5am, as long queues can be seen by 6am.