by Björn Schöpe
translated by Annika Backe
August 27, 2015 – Things will be pretty much the same to the quadrillionnaires living in Zimbabwe: they will remain as poor as they are now. The balance of their bank accounts, however, will no longer amount to hundreds of quadrillions of Zimbabwe dollars but to the manageable sum of 5 US dollars.
As Governor of the Reserve Bank of Zimbabwe John Mangudya announced on September 11, 2015, Zimbabwe decommissions its currency, the Zimbabwe dollar (ZWD), for good. The Zimbabwe dollar can be exchanged for US dollar until the end of September. It will cease to serve as legal currency as of October this year.
The African country used to suffer from uncontrollable hyperinflation for years on end. At the beginning of 2009, Zimbabwe issued the 100 quadrillion Zimbabwe note which has become something of a legend. Back then, that note did not even meet the costs of an employee’s weekly bus ticket in the capital Harare.
The Reserve Bank of Zimbabwe responded to this situation by pending the ZWD in 2009, when inflation reached its peak. Instead, the country resorted to foreign money as legal currency, to the US dollar and the South African rand, for example. The Zimbabwe dollar virtually did not matter anymore in every-day life.
The Reserve Bank of Zimbabwe will pay the equivalent US dollar amount for each account balance by October 1, 2015. It is said that the country have supplied 20 million US dollars for the conversion.
Accounts with balances of up to 175 quadrillions ZWD (a 175 and another 15 zeros) will be paid a flat 5 US dollar. Savers having an account with higher balances will be paid 1 US dollar in exchange for 35 quadrillion ZWD. This applies to pre-2009 accounts – hence to accounts before the time when, in February that year, 12 zeros were cut off with a scratch of a pen. There will be adapted exchange rates for post-2009 accounts.
Furthermore, banks will exchange cash for US dollars until the end of September. Admittedly, the exchange rate is not as good as the one that applies to bank accounts but, on the other hand, no proof of origin will be requested.
The Zimbabwe dollar is thus a piece of history now – likely to be encountered at collector fairs only.
Please find the official press release and the exchange rates at the website of the Reserve Bank of Zimbabwe.
We have reported about the introduction of new currencies in Zimbabwe before.
Only recently Zimbabwe tried to counter the cash shortage by introducing the so-called bond coins.