The Reserve Bank of Zimbabwe released US$10 million worth of a controversial quasi-currency Monday in an attempt to ease the country's liquidity troubles.
The initial release of the so-called bond notes will be "released into the market through normal banking channels in small denominations of $2 and $5," according to a press release from the Reserve Bank of Zimbabwe. The new bond notes and coins are pegged 1:1 to the U.S. dollar. The statement, published on Saturday, detailed that this initial $10 million release would take the form of $2 bond notes and $1 bond coins.
Bond coins first began to be issued in late 2014 in an attempt to ease the country's liquidity crisis.
Zimbabwe's currency collapsed in 2009 following hyperinflation, during which the 100 trillion Zimbabwean dollar note was widely reported to be so worthless that it was unable to cover the cost of a bus ticket. Since the government scrapped the Zimbabwean dollar, a range of currencies are now officially accepted in the country, the most prominent of which is the U.S. dollar.
The country's liquidity issues were partly due to an import/export imbalance. World Bank data chalks Zimbabwe's total imports of goods and services to fall at 48.76 percent of gross domestic product (GDP), whereas its export percentage is recorded to be just 26.25 percent. According to the Reserve Bank of Zimbabwe's press release, the bond notes are intended "to fund export incentives of up to 5 percent which will be paid to exporters of foods and services and diaspora remittances."
No new accounts will be opened, as the bond notes will be deposited into existing U.S. dollar accounts. Withdrawal limits of bond notes have been set at a maximum of $50 per day and $150 per week.
The bond notes are backed by a US$200 million African Export Import Bank loan, according to a press release from the Reserve Bank of Zimbabwe from May of this year. The statement also said that the bond notes would be printed outside Zimbabwe "on an agreement that also safeguards against abuse of the facility."
Street protests are reported to have sparked up across the country. Many Zimbabweans doubt the government's ability to manage the new bond note system, with some shops refusing to accept the currency.
"There is a complete lack of trust in (Zimbabwe's) government," Christopher Vandome, a research assistant at think-tank Chatham House's Africa program, told CNBC via telephone.
Some consider the bond notes' success to be directly correlated to President Robert Mugabe's future hold on power. Reuters reported on Friday that intelligence briefings it had seen advocated this, warning the country's leader to "wake up and smell the coffee." At 92, Mugabe is the world's oldest head of state.
Vandome added that the bond notes' success "comes down to whether or not people will accept this," adding that "no-one's come up with an alternative."