'Bond Notes Trigger Panic Withdrawals'
Published: 2016 May 08 06:49:14 (4025 Views)
The two month time lapse between the Reserve Bank of Zimbabwe’s announcement and expected release of bond notes into the market is likely to create panic withdrawals among the banking public while companies are likely to transfer their money to other markets such as property to hedge against uncertainties, officials have said.
Confederation of Zimbabwe Industries president Busisa Moyo said as industry they were concerned about the period between the announcement and issuance of the actual bond notes as it could create panic in the banking and transacting public.
“There is a possibility that this time lapse can create unintended consequences in the end. There are several likely reactions that could be problematic considering our recent economic history and the general lack of confidence in locally engineered instruments,” said Mr Moyo.
Mr Moyo said some possible situations included companies and individuals moving their US dollars out of the formal system, reverting to “under the pillow” banking which would negatively affect bank deposits as well as corporates moving money into assets using the local RTGS system to hedge cash risk by investing in properties, raw materials and commodities.
“People will queue daily to utilise the $1 000 maximum withdrawals and not rest until all their US dollar balances are at zero. This again could be a negative consequence which will create further cash shortages,” he said.
Mr Moyo, however, said the reactions were likely to change, with perception easing as with the coins once reassurances from the governor, business community and the Nostro guarantor are made. He said the main challenge was of confidence and trust in local institutions.
“Memories tend to be long and vivid, likewise fear can override logic and good interventions,” said Mr Moyo.
The Bankers Association of Zimbabwe (BAZ) could, however, not shed any light on the issue with chief executive officer Sij Biyam saying there was still confusion in the public domain on the governor’s statement on bond notes.
“Until clarified by him (governor), we will find it difficult to respond to questions as per hereunder,” said Mr Biyam.
Meanwhile, the local stock market has not reacted to the introduction of bond notes issue with market researchers saying the local bourse on Friday recorded its 12th consecutive day surge in trade.
- Sunday News
Confederation of Zimbabwe Industries president Busisa Moyo said as industry they were concerned about the period between the announcement and issuance of the actual bond notes as it could create panic in the banking and transacting public.
“There is a possibility that this time lapse can create unintended consequences in the end. There are several likely reactions that could be problematic considering our recent economic history and the general lack of confidence in locally engineered instruments,” said Mr Moyo.
Mr Moyo said some possible situations included companies and individuals moving their US dollars out of the formal system, reverting to “under the pillow” banking which would negatively affect bank deposits as well as corporates moving money into assets using the local RTGS system to hedge cash risk by investing in properties, raw materials and commodities.
“People will queue daily to utilise the $1 000 maximum withdrawals and not rest until all their US dollar balances are at zero. This again could be a negative consequence which will create further cash shortages,” he said.
Mr Moyo, however, said the reactions were likely to change, with perception easing as with the coins once reassurances from the governor, business community and the Nostro guarantor are made. He said the main challenge was of confidence and trust in local institutions.
“Memories tend to be long and vivid, likewise fear can override logic and good interventions,” said Mr Moyo.
The Bankers Association of Zimbabwe (BAZ) could, however, not shed any light on the issue with chief executive officer Sij Biyam saying there was still confusion in the public domain on the governor’s statement on bond notes.
“Until clarified by him (governor), we will find it difficult to respond to questions as per hereunder,” said Mr Biyam.
Meanwhile, the local stock market has not reacted to the introduction of bond notes issue with market researchers saying the local bourse on Friday recorded its 12th consecutive day surge in trade.
- Sunday News
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