After the grand decision to drop the U.S dollar and other currencies for an original currency made within its own parameters, Zimbabwe is yet to determine whether this was a good idea or a nightmare waiting to happen.
Zimbabwe ditched its own currency for the U.S. dollar and other currencies in 2009, after hyperinflation reached 500 billion percent the previous year.
Experts expressed doubts about whether the government has the fiscal and monetary discipline to stick to its commitment to lower the budget deficit and keep inflation in check.
The last time Zimbabwe had its own currency, a decade ago, Former President Mugabe’s government was able to turn on the printing presses to fund higher salaries for government workers, curry favor with the military and pay political opponents – with disastrous economic consequences.
Some also fear that the Reserve Bank of Zimbabwe (RBZ), the country’s central bank, will be unwilling to loosen its grip over the currency as its governor, John Mangudya, is thought to oppose the move to abandon the dollar peg.
Whether Zimbabwean policymakers can convince their doubters, both in financial markets and on the streets, will be central to the success or failure of the new currency, dubbed the Real Time Gross Settlement (RTGS) dollar.