Economists welcome huge-denomination Zimbabwean notes

The newly-circulated higher- denomination Zimbabwean notes will enhance efficiency within the country's economy and cut the burden of carrying piles of paper money that buy less, economists here said on Friday.

A bearer cheque denominated in 100,000 Zimbabwean dollars ( about one U.S. dollar) came into circulation in the major cities of Zimbabwe on Thursday, exactly four months after the central bank introduced the 50,000-dollar bearer cheque denomination The bank did not rule out bringing in even higher-denomination notes if inflation remains unchecked.

The country's annual inflation stood at 1,042 percent at the end of April.

Economist Jonathan Kadzura said the new notes would increase mobility of resources in the economy, and reduce risks associated with handling huge amount of cash.

"A 100,000-dollar note is not a huge denomination especially in this hyperinflationary environment we are operating in. It is essential that the note comes into circulation at the same time salaries and wages have increased dramatically in all sectors of the economy," he said.

Eric Bloch, also a Zimbabwean economist in Bulawayo, the second largest city of the country, said that the introduction of the new note was necessary, as it was becoming difficult to conduct day-to- day business with the notes currently in circulation.

However, some analysts said the introduction of the new notes has been driven more by high inflation than a desire to take the burden out of transactions.

Others said the bigger notes should be a reminder to both industry and agriculture of the need to boost production, which will help in stabilizing the economy and also addressing the current drivers of inflation, such as limited foreign exchange reserves.

Bearer cheques were introduced upon the southern African country's serious cash shortage in 2003 and function as normal currency although they do not fall under the common definition of money.

The first bearer cheques had a lifespan of six months, but their validity has been extended indefinitely by the central bank.

Source: Xinhua