Wednesday, 30 July 2008

Zimbabwe announces currency to be divided by 10 billion

The Zimbabwean Central Bank governor, Gideon Gono, has announced that from 1 August 2008 there will be a new Zimbabwean dollar, worth 10 billion existing dollars. Link.

Is this the biggest zero-slashing exercise in the history of money? They are taking ten zeros off the end of their bank notes! The effect will be to reduce the typical price of a loaf bread from Z$250,000,000,000.00 to Z$25. That should be more convenient all round - and since they can't get the paper to print such large banknotes there will be a saving there as well. The old and new dollars will both circulate until the end of the year when the old ones will cease to be legal.

Of course, this all a complete nonsense. They will be adding more zeros to the new notes before you know it. The real future for the Zimbabwean dollar is oblivion. Possibly Zimbabwe will enter the "Rand zone" and adopt the South African Rand as its official currency. Zimbabwe only really exists due to the generosity of the South Africans anyway. They could try to adopt the US dollar, like various failed South American states have done - with some success (Equador) and some failure (Argentina).

Or, idea from the left field here, the Chinese are muscling into the African continent; how about a Yuan peg?

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