Zimbabwe's own-label dollar coins face consumer resistance

Thu Jan 8, 2015 3:17am EST
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By MacDonald Dzirutwe and Sureka Asbury

HARARE (Reuters) - Nobody wanted the Zimbabwe dollar, so the southern African country dumped it for the U.S. dollar in 2009 to stave off economic collapse and sky-rocketing hyperinflation.

Now nobody wants the "bond coins" it put in circulation last month to replace the lollipops, chewing gum and pens that have been used in lieu of change for transactions in shops.

Adopting the U.S. dollar as your own currency, as Ecuador has also done, not only raises questions about money supply, monetary policy and national sovereignty.

Zimbabwe's "coin conundrum" also highlights the day-to-day difficulties that people encounter when their economy takes such a path.

The paper greenback is readily acceptable, but getting U.S. coins en masse to put into circulation is a different matter.

So Reserve Bank of Zimbabwe governor John Mangudya introduced the new "bond coins" last month. They are named after a $50 million bond that was floated to mint and import them from neighboring South Africa.

The new coins have the same denominations and value as U.S. cents but can only be used in Zimbabwe.

Trouble is, not many people want to use them because they think they will not be able to persuade others to accept them. Some also fear the coins could be a first step towards the return of the dreaded Zimbabwe dollar.   Continued...

A bag of new Zimbabwean coins, candies and packs of cigarettes are seen in Harare, December 18, 2014. REUTERS/Philimon Bulawayo