Tech & Biz

Zimbabwe's Answer to Inflation: Divide by 10 Trillion

by Jordan Yerman | September 17, 2008 at 09:26 am

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In a misguided effort to curb inflation, Zimbabwe's central bank issued a new Z$1000 banknote, along with limiting daily individual bank withdrawals to Z$500. This move puts to paper a move made last month, which chopped off ten zeroes from its largest-denomination banknote. To date, Zimbabwe has removed a total of 13 zeroes, though citizens have not gotten richer.

According to the bank, "introducing the new 1,000 Zimbabwe dollar note was for your (Zimbabweans) convenience."

The bank has introduced a series of new notes since August, after the central bank struck 10 zeros off the local currency.

There have been chronic shortages of cash amid hyperinflation which was last reported at 11.2 million percent.

However, simply reprinting ten trillion as one thousand will not do anything to curb inflation, as the new thousand will still be at the outer edge of a citizen's currency reserves.

However, analysts said the new note -- which can only buy a loaf of bread -- will not ease pressure on cash shortages because of the ever-increasing prices.

"It will not make even a small impact. What we need in Zimbabwe is a clear change of policies, start production and then inflation will start easing up," said John Robertson, an economic consultant. "The zeros seem to be coming back no matter how often they slash them."

Prior coverage here.

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