Reserve Bank runs out of cash
http://www.thezimbabwetimes.com/?p=4634
September 22, 2008
By our correspondent
BANKS are failing to meet the demand for cash by the public as the
Reserve bank has failed to satisfy the demand.
The Reserve bank last week reviewed the maximum cash withdrawal from
$500 to $1000 for both individuals and companies but this has not
reduced the number of people queuing to withdrawal money.
Today, Monday, many people failed to access their cash as most banks
said they had not received any cash from the Reserve bank.
This is happening despite claims by Reserve Bank governor Gideon Gono
to have put in place "pro-active and appropriate" strategies after the
withdrawal of Giesecke and Devrient, the German company which was the
main supplier to Zimbabwe of paper to print money since 1952.
Reserve Bank officials, however, blame the banks, saying the cash
shortages will persist as banks have inadequate Treasury Bills (TB) to
use as collateral when collecting money from the Bank.
According to the Reserve Bank, the shortage of TBs had resulted in
stringent conditions for the release of money onto the market.
Although the Reserve Bank has introduced a higher denomination note,
long winding queues of people waiting to withdraw money continue to be
a common feature around the central business district of Harare.
Banks are required to lodge Treasury Bills at the Reserve Bank as
collateral before being allocated cash that meets the daily
requirements of their clients.
Bankers said Treasury Bills which are issued at 340 percent against
official inflation of 11,2 million percent will compromise their
earnings and force them to scale down on the amounts they have been
procuring in cash in relation to deposits.
While the Reserve Bank has kept the accommodation rates very high,
annualised at 1,5 decillion (33 zeros) percent, depositors are
langui****ng with interest rates below 250 percent per annum.
The Reserve bank also demands 45 percent of statutory reserves from
banks and this according to officials has seen most financial
institutions "hurriedly" offloading their securities ****tfolios to
improve their liquidity positions.
Banks have become victims of abrupt policy changes and disposing of
their stocks thus becomes the only option to improve liquidity.
Confronted with high inflation, depositors see little incentive to
leave money in the banks, especially now when the interest rates on
savings and current accounts are generally below 10 percent per annum.
Commercial banks are now citing general preference towards Bankers
Acceptances over TB's which no longer have the "all im****tant liquidity
status".
Presently, 30-day Bankers Acceptances are being drawn in the market at
yields around 1 000 percent, which, when annualised, leave banks raking
in returns of about 147 731 percent.
These returns are well above the TB returns of 340 percent. Banks have
had few TBs ac***ulating on their balance sheets.
Gono has however accused banks of creating "artificial" cash shortages
by failing to collect money from the country's main bank to distribute
it to clients.
"Notwithstanding the high levels of cash stocks sitting at the Reserve
Bank ready for dispatch into the market, banking institutions have been
noted to be engaging in imprudent and unethical practices which are
creating artificial queues for cash," Gono told journalists and bankers
recently.
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