Zimbabwe to introduce Zimbabwe Bond Notes: reactions and perceptions of economic agents within the first seven days after the announcement

Makochekanwa, Albert (2016): Zimbabwe to introduce Zimbabwe Bond Notes: reactions and perceptions of economic agents within the first seven days after the announcement.

Abstract

The study analysed the reactions and perceptions of Zimbabwean economic agents following the announcement of the impending introduction of the Zimbabwe Bond Notes. The analysis was done through primary data collection in which a structured questionnaire was administered to 145 economic agents within the first seven days after the announcement. The following are the major findings: majority of the surveyed Zimbabwean economic agents, totalling 109 representing 75% of the sample said they were frightened by the announcement. A total of 95 respondents (which accounted for 66% of the total sample) indicated that the introduction of the Zimbabwe Bond Notes will negatively impact on their business operations and/or economic activities. To minimise the possible negative impacts of Zimbabwe Bond Notes on their economic activities, economic agents were going to (i) withdraw all the US dollars from their local (Zimbabwean) bank accounts, (ii) keep all their US dollars safely in their homes or even under the pillow and (iii) do nothing! Given free choice and without any coercion to choose between US dollars and the Zimbabwe Bond Notes as the medium of exchange, majority of respondents totally 136 (representing 94% of the sample) said they will prefer and demand US dollars, while only two respondents (representing 1% of the sample) said they will demand the Bond Notes. A total of seven respondents (representing 5% of the sample) said they will demand both US dollars and Zimbabwe Bond Notes. The major disadvantages of the introduction of Bond Notes into the economy includes (i) not convertible, (ii) discourages imports, (iii) discourages investments, (iv) inflationary, (v) erodes confidence in the financial system, (vi) promotes black (parallel) market in foreign currency. The introduction of the the Zimbabwe Bond Notes will have a negative and severe impact on the economic activities of Zimbabwe as represented by declines in exports, manufacturing activities, investment and deposit banking; and an increase in inflation. Majority of respondents amounting to 135 out of the 145 interviewees (representing 93% of the sample) said that if the authorities are determined to continue and implement the policy contrary to the views by the general business community and ordinary Zimbabwean citizens, then the best they can do is to inject the US$200 million into the economy as United States of America dollars (US$).

• Item Type: MPRA Paper
• Language: English
• Keywords: Zimbabwe Bond Notes, Reserve Bank of Zimbabwe, Fear
• Subjects: E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E41 - Demand for Money; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E51 - Money Supply ; Credit ; Money Multipliers; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy

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