Zimbabwe finally ditches currency for the US dollar
A one hundred trillion dollar Zimbabwe note issued in 2008 is displayed in New York, U.S., on Monday, April 26, 2010. A 10-year economic recession saw inflation rise to 500 billion percent in December 2008, leading the southern African nation to abandon its currency in February 2009. Photographer: Daniel Acker/Bloomberg©Bloomberg
One of the few central banks to make 1920s Germany look like a period of monetary prudence and stability is finally ditching its currency.
The Reserve Bank of Zimbabwe said it will begin a process to “demonetise” its all-but-worthless currency on June 15. The move was planned by the Minister of Finance and Economic Development last year and the process is expected to be complete by September 30, writes Patrick McGee.
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Within that window, the notes can be exchanged for US dollars. After that they will be worthless — which is not so different from their value now: the RBZ said accounts “with balances of Zero to Z$175 quadrillion will be paid a flat US$5.”
“Hyperinflation” doesn’t begin to explain the monetary problems in Zimbabwe, which denominates currencies with this many zeroes: 000,000,000,000.
In 2009 Zimbabwe adopted a multiple currency system, allowing at least eight currencies from outside the country be used as legal tender. Confusion ensued. The RBZ said today the decision to retire the currency “has therefore been pending and long outstanding since 2009”.
Demonetisation is not compensation for the loss of value of the Z$ due to hyper-inflation. It is an exchange process.