And in no time, informal sector business started to reject $1 dollar coins and $2 notes and this is still happening.
This has the reached the ears of Finance Minister Mthuli Ncube who then went on to clarify that lower denominations can still be used to settle payments. Talking to the Herald, the Finance Minister said:
We want to make it clear that $2 notes are still legal tender. Perhaps we need to issue a press statement to that effect. But we will be substituting those bond notes with new notes but it is a gradual process.
It will take much more than a press statement to get informal sector businesses to accept $1 coins and $2 notes. These guys naturally don’t follow mainstream rules so it will take a bit of coercion and persuasion to make them accept the lower denominations.
But at least people who are having trouble to spend their $1 coins and $2 notes in the informal sector can still use them in formal establishments.
Unintended consequences of higher denominated notes
The Reserve Bank of Zimbabwe has introduced higher denominated notes to curtail cash shortages. And like what happened in the past, this is being followed by not only the demonitization of lower denominations but also the depreciation of the local currency.
The value of the Zimbabwe dollar is on an accelerated free fall as a result of the injection of the $10 and $20 notes. Despite the RBZ issuing many Directives to stifle the black market, the Zimbabwe dollar’s value continue to take a heavy beating.