Zimbabwe Introduces Bond Notes

Zimbabwe has begun issuing a surrogate currency—$2 and $5 denomination ‘bond notes’—in a bid to ease a cash shortage. The move has prompted fears of a return to hyperinflation, DW reported. Crippling cash shortages surfaced in the first quarter of 2016 and in May the Reserve Bank of Zimbabwe announced the introduction of bond notes as a corrective measure. Several dates to introduce the currency have come and gone. Bond notes are not a legal tender that can be used for transactions outside of Zimbabwe. However the bond notes are being given the same value as the US dollar. The bond notes’ value is derived from a $200 million bond facility guaranteed by the Egypt-based AfreximBank. According to Reserve Bank of Zimbabwe Governor John Mangudya, the bond notes are an export incentive for exporters to earn foreign currency the country is in dire need of. Citizens do not trust the government. Many fear the return of the Zimbabwean dollar, which lost value and hit inflation figures that went over the million percent mark.