Amidst the ongoing cash shortage in Zimbabwe, the country explores cryptocurrencies to find a solution to cope with the crises. The newly appointed Finance Minister of Zimbabwe, Mthuli Ncube plans to push the country’s Central Bank to establish a ‘cryptocurrency unit’ to avail understanding and better opportunities to invest.
Zimbabwe is currently facing a major liquidity crunch and cash shortages, largely due to depleting Nostro accounts as exports decline, and the over-issuance of Treasury Bills (TBs) to finance government spending. Inadvertently, banks are forced to impose stringent withdrawal limits, making it difficult to access savings.
The crunch has forced Zimbabweans, especially residing near the border towns such as Musina in South Africa and Francistown in Botswana to operate international banks to access cash. As a part of the plan to evolve out of the crises, Ncube wants Zimbabwe to turn into a crypto-friendly country. He stated:
“Zimbabwe should be investing in understanding innovations and often central banks are too slow in investing in these technologies. But there are other countries which are moving faster. If you look at the Swiss central bank they are investing in- and understanding bitcoin.”
“One can pay for travel using bitcoin in Switzerland. So, if these countries can see value in this and where it’s headed, we should also pay attention. We have innovative youngsters so the idea shouldn’t be to stop it and say don’t do this, but rather the regulators should invest in catching up with them and find ways to understand it, then you regulate it because you now understand it.”
Following Bitcoin’s success in the country, altcoins such as Litecoin, Namecoin, PPCoin, and Bitmari are gaining popularity. However, the Reserve Bank of Zimbabwe (RBZ) remain cautious towards the digital assets and isn’t willing to embrace them.
Notably, quite contrary to Ncube’s statement, the RBZ recently requested that financial institutions avoid cryptocurrency transactions for fear of possible problems from unregulated trading. A circular signed by the RBZ registrar of banking institutions, Norman Mataruka, states that the crypto aversion is to protect the public and safeguard the integrity, safety, and soundness of the country’s financial system.
Cryptocurrencies are not accepted as a legal tender in the country and the authorities fear that accepting it can open the doors for illegal activities such as money laundering or supporting terrorism.
According to Zimbabwe’s former minister of Finance and Economic Planning, Patrick Chinamasa the country’s economy currently stands at “96% cashless.” Under the new administration, TeleCash, EcoCash, Zipit, OneMoney, bank cards, and the internet are prevalent and have mostly replaced cash transactions.