BUSINESS REPORTER
A member of the Reserve Bank’s Monetary Policy Committee (MPC) says gold coins are not currency and it was never the central bank’s intention to continue issuing them without limit.
The International Monetary Fund said on Thursday that Zimbabwe should wind down the use of the gold coins and introduce interest-bearing assets to suck out excess local currency balances.
An MPC member Persistence Gwanyanya told Business Times that the central bank and the MPC never viewed gold coins as a “silver bullet” but “necessary intervention at the time”.
The great idea of behind gold coins was to reverse the accelerated depreciation of the ZWL through mainly the announcement effect and curtailing ZWL volatilities due to attractiveness of the asset, Gwanyanya said.
“That’s why by 22 November, RBZ has only issued 14 200 gold coins worth ZWL$13.6bn. The target was always to issue a maximum of 15 000 gold coins that’s why IMF agreed with the authorities to wind down issuance of the same,” he said.
“Having achieved a measure of stability the focus is now on attractive ZWL investment instruments to anchor our currency.”
RBZ governor John Mangudya introduced gold coins in July to mop excess local currency balances blamed for fuelling the parallel market leading to the rout of the local currency.
It also hiked the bank policy rate to 200% from 80% to halt borrowing for speculative purposes.
The central bank last month introduced smaller denominated gold coins as it continued with its tight monetary policy stance.
