Zimbabwe’s newly appointed Finance Minister Mthuli Ncube said part of his plans to mitigate the country’s ongoing cash shortage include pushing the Central Bank to establish a ‘cryptocurrency unit’ to better position the country to invest.
“Zimbabwe should be investing in understanding innovations and often central banks are too slow in investing in these technologies. But there are other countries which are moving faster. If you look at the Swiss central bank they are investing in- and understanding bitcoin,” said Ncube.
“One can pay for travel using bitcoin in Switzerland. So, if these countries can see value in this and where it’s headed, we should also pay attention. We have innovative youngsters so the idea shouldn’t be to stop it and say don’t do this, but rather the regulators should invest in catching up with them and find ways to understand it, then you regulate it because you now understand it”, he added.
A liquidity crunch and cash shortages have been largely caused by depleting Nostro accounts as exports decline, and the over-issuance of Treasury Bills (TBs) to finance government spending.
Border towns such as Musina in South Africa and Francistown in Botswana, where international banks have operations, had become popular with Zimbabweans looking to access cash.
Bitcoin’s success has created a number of competing cryptocurrencies, such as Litecoin, Namecoin, PPCoin and Bitmari in Zimbabwe.
Ncube’s idea of embracing cryptocurrency, however, flies in the face of the Reserve Bank of Zimbabwe (RBZ), which has remained cautious over virtual currencies.
The RBZ recently requested that financial institutions avoid cryptocurrency transactions for fear of possible problems from unregulated trading.
According to the circular signed by the RBZ registrar of banking institutions, Norman Mataruka, the RBZ said the measures were to protect the public and safeguard the integrity, safety, and soundness of the country’s financial system.
Cryptocurrencies are not legal tenders in Zimbabwe, and the concern is that it may be used to fund illegal activities such as money laundering or supporting terrorism, said RBZ.
Zimbabwe’s former minister of Finance and Economic Planning, Patrick Chinamasa announced the country’s economy stands at “96% cashless.”
Under the new administration, EcoCash, OneMoney, TeleCash, Zipit, bank cards, and the internet are prevalent and have mostly replaced cash transactions.