Abstract:
The Zimbabwean financial sector has been retrogressive, constrained, and unpredictable since the year 2000,
serving for the multiple currency periods (2009-2013) after the demonetization of the domestic dollar. The sector
since then has seen a number of commercial banks fail to meet RBZ (Reserve Bank of Zimbabwe) minimum
capital requirements, put under curatorship, delisted or liquidated because of a myriad of operational and financial
challenges. The objective of this study is to make an assessment of whether or not the introduction of bond notes
has been a curse or blessing. The study drew raw data from bank account holders, academics, general public,
corporate world and commercial banks in Masvingo for analysis and interpretation. The study established that the
majority of people, corporate world and commercial banks were sceptical to embrace the surrogate bond notes
because of the uncertainties, operational and financial risks that they paused on the domestic financial markets. It
was also discovered that most banks were quick to pay clients’ withdrawals in bond notes, deduct US dollar
equivalences from their accounts, and distinguish bond notes from US dollars at the point of making deposits and
foreign business transactions. It was also realized that there was market indiscipline and trading in bigger US
dollar notes in the informal sector and serious shortage of the same notes in the formal sector. The study
concluded that the introduction of bond notes to trade parallel to the US dollar brought a serious shortage of cash
on formal markets and increases in the general price level of goods and services. The study therefore recommends
that the RBZ should completely withdraw the bond notes from the market to accord the US dollar its world
market value and restore confidence and discipline in the Zimbabwean financial sector. The study also
recommends another option of the adoption of the South African Rand as an interventionist way of solving
Zimbabwe’s liquidity crises.
