By Bernard Mpofu
HARARE, Zimbabwe--Zimbabwe will start issuing on Monday $10 million in so-called bond notes, a parallel currency the government is introducing to alleviate a severe shortage of U.S. dollars in the country, the central bank said Saturday.
The bond notes, whose impending introduction was announced several months ago, has led to at times violent protests, as many Zimbabweans fear that they are a first step by the government to start issuing its own currency again. The Southern African country started using the U.S. dollar in 2009, after years of hyperinflation severely devalued its own Zimbabwean dollars. At its height, the central bank was issuing $100 trillion notes, which at the time barely paid for a bus ticket.
Although Zimbabwe officially accepts a basket of foreign currencies--including the South African rand, the British pound and the euro--dollars have become the dominant tender.
However, in recent months Zimbabwean banks have been running out of U.S. dollars, leading to tight withdrawal limits and long lines in front of ATMs.
The central bank said that initially it will issue $10 million in $2 dollar bond notes, along with $2 million in $1 dollar bond coins. Bond coins have been in circulation for more than a year, but until now the largest denomination was 50 cents. The bond notes are pegged 1:1 to the U.S. dollar, the bank said.
In total, the central bank has said it would issue $200 million in bond notes, which is says are backed by a credit facility from the African Import and Export Bank.
The central bank sought to alleviate concerns that many businesses won't accept bond notes amid fears that they willquickly lose on value.
"The Reserve Bank has engaged and agreed with the Retailers Association of Zimbabwe, fuel companies, representatives of the various business associations and the Consumer Council of Zimbabwe on the use and acceptability of bond notes as a medium of exchange in the country," it said.
(END) Dow Jones Newswires
November 26, 2016 10:05 ET (15:05 GMT)
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